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Retailing

Retailing is the process of selling goodsand services directly to final consumerseither for personal or non-business use.

The manufacturer, wholesaler ordistributor or retailer directly selling goodsand services to consumers comes underthe preview of retailing. It does not matterhow goods are sold that is either bytelephone,internet,vending machine etc.

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Evolution of Retailing

The term retailing is derived from theold French word retailer meaning a

piece of or to cut up

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Retail

David Gilbert has defined retail as anybusiness that directs its marketing

efforts towards satisfying the finalconsumer based up on theorganization of selling goods and

services as a means of distribution.

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RetailingThe retail sector in South-Asia is witnessing a majortransformation in size,structure,growth and format. InIndia retail sector accounts for 10 % of the GDP and 8 %of the employment. According to KPMG the retail sector isestimated to be 17800 billion industry compared to 10800billion in the year 2006.The share of MTOS in the retailing

in India is 3.4 % and it is expected to grow significantly inthe coming years as per FICCI report and the share ofMTOS is expected to increase 30 % of the retail industryin the next few years.

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Factors which fuels thedevelopment of Modern

Retailing

a) Economic development b)Proportion of young people in

employment c) Life-style of people d)Increase in the number of working of

women e)Double income families Development of media Development of technology More disposable income

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Retail Formats

a) Specialty stores-it is having only narrow product line. In other wordsin specialty stores

b) Convenience store-small store in residential area, often open 24x7,limited line of high-turn over convenience product plus take out.

c)Chain of Storesd)Franchisee) Departmental stores-several product lines will be there. (Eg:Shoppers

Stop)f)Super Marketsg)Hyper Markets

h)Shopping MallsI) Factory/Seconds Outlet(Continuation in next

page)

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d) Discount store-Standard or specialtymerchandise, low-price low-margin, highvolume stores

Eg: Margin free,Wal Mart e) Off-price retailer-Leftover goods,

overturns irregular merchandise sold at lessthan retail. Factory outlets, independent off

price retailers. . g) catalog showroom-Broad selection of

high mark-up, fast moving, brand-namegoods sold by catalog at discount.

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The Important elements in

retail mix include thefollowing Store design and display

Customer service Communication mix elements

Pricing method or strategy

Merchandise planning and assortments Location

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Product classification of

retailing Durable and

Non-durable

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Changes impacting retailing

in India

The level of economic growth

Improvement in standard of living Increase in population

Improvement in the educational standard

of the people Increase in the discretionary time of the

consumers

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Factors attracting global

retailers to India As a part of the research, AT Kearney

conducted a voice of the global retailer survey in

order to understand what thy consider as keysuccess factors while expanding outside theirhome markets. The factors that will beconsidered are

Country risk Market attractiveness

Market saturation

Time pressure

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The characteristic of

retailing are as follows The interaction between the retailer and the

customer is service oriented

Retailers sell small amount of goods tocustomers on a frequent basis

Retailers provide the consumers facilities like

location, payment, credit and after sales service Retailers attempt pricing policy which is modified

depending upon consumers demand, level ofcompetition etc

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Other functions of retailingare as follows or activitiesperformed by retailers

Arranging an assortment of offerings Breaking quantity

Holding stock

Extending services

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Basic facts of Retail

industry in India Retail sector divided into organized

and unorganized

Largest employer after agriculture Retail sector contributes 10 % of

India's GDP

8 % of people are employed The retail sector is 17800 billion

industry in 2006 compared to be10800 in 2001

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The Indian retail market is estimated to be 350billion.

Organized retail market estimated to be 8 billion

The share of MTOS is 3.4 % and expected to be 30% within few years

Organized retailing accounts for 3-4 %

Un-organized sector accounts for 96-97 % of GDP

Organized retail sector expected to grow by 10 %by the end of 2010.

12 Million retail outlets in India

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FDI in Retail sector in India

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Foreign Entry in India

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Franchise agreements Fast food retailer Dominos entered Indiathrough master

Pizza Hut entered

Cash and Carry

wholesale trading

100% FDI is allowed in wholesale trading

which involves

building of a large distribution

infrastructure to assist local

manufacturers

The wholesaler deals only with smaller

retailers and not customer

Metro AG of Germany was the first

significant global

player to enter India through this route

Strategic licensing

agreements

SPAR entered into a similar agreement with

Radhakrishna

Foodlands Pvt. Ltd

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Challenges faced by

Indian Retail Industry Shortage of talented professional

(middle Level)

FDI restrictions

Labour Laws

Lack of infrastructure

Different tax rates

Does not have industry status

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Global Retail industry related

facts 1) Worldwide retail sales are estimated to be around US $ 7 trillion 2) The top 200 largest retailers account for 30 % of the world wide

demand 3) The money spend on household consumption has increased by

68% between 1980 and 1998. 4)As per UNDP Human Development Report states that the

advertisement expenditure is increasing fast pointing fact that retailsector is in boom only.

5) Out of US $10 trillion US $ 6.6 trillion (two third) of Americaneconomy is consumer spending

6) Retail turn over in 2001 in European Union was almost 2000

billion and the trend is expected to continue. 7) Retail trade in Europe employs 15% of the European workforce 8) Three million firms and thirteen million workers are associated

with retail sector in Europe.

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Organized retailing in

South Asian countriesOrganized Retailing Un-Organized Retailing

Malaysia 50% 50%Thailand 40% 60 %Philippines 35% 65%Indonesia 25% 75%South Korea 15% 85%China 20% 80%India 2% 98%

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There are six steps involved in the development

of a retail strategy, they are as follows

1) Defining the business of the firm in terms oforientation towards a particular sector

2) Setting long term and short term objectives with

regard to image and profitability 3) Identifying the target market towards which to

direct efforts on the basis of customerscharacteristics and needs

4) Deciding the broad direction the company must

take in the future 5) Implementing an integrated plan that include all

the aspects of retailing such as pricing, location andchannel decisions.

6) Evaluating and revising the plan depending up

on the nature of internal and external environment.

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Retail concept

Customer orientation-The retailer makes a clearstudy of the needs of the customer and attempt tosatisfy the needs.

Goal orientation-The retailer has clear cut goals anddevises the strategies to achieve those goals.

Value driven approach-The retailer offers good

value to the consumer with merchandise having theprice and quality appropriate for the target market

Co-Ordinated effort-Every activity of the firm isaligned and designed to maximize its efficiency anddeliver to the consumer.

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International retailing (steps for expansion)

1) Quantification 2) Market assessment3)

Cultural difference 4) Competition 5) Price 6) Gross margin Analysis 7) Regulatory

issues 8) Logistics planning9) Systemintegration 10) Head office and Company

structure11) Performa development12)Entry strategy and location analysis 13)Implementation services