Economic Significance of Retailing in India

8/11/2019 Economic Significance of Retailing in India

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PPT 1-1 Consumer Behavior Ignacio J. Vzquez E. 2007

ntroduction to the

World of Retailing

Unit I:

Place of Retailing in the Marketing Mix, Trends

in retailing, Retail Economics


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What is Retailing?

Retailinga set of business activities that adds value to the

products and services sold to consumers for their personal or

family use.

A retaileris a business that sells products and/or services to

consumers for personal or family use

Retailers:

-HUL , Relience Fresh,Pantloon, Croma, Shoppers Stop,

Dmart , Food Bazar, Holiday Inn, McDonalds, Amazon.com


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Place of Retailing in the Marketing Mix

The Four Ps of Marketing

Distribution

Retailers are part of the

distribution channel

Retailers are part of the

distribution channel

Product

Price

Promotion


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Distribution Channel

Distribution ChannelPPT 1-4


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A retailers role in a distribution channel

Retailer:is a business that sells products and/or services to consumersfor their personal or family use. Retailers are the final business in adistribution channel that links manufacturers to consumers.

Distribution Channel: is a set of firms that facilitate the movement ofproducts from the point of production to the point of sale to the

ultimate consumer. Manufacturers: typically make products and sell them to retailers orwholesalers.

Vertical integration:means that a firms performs more than one set ofactivities in the channel, such as investments by retailers in wholesalingor manufacturing.

Backward integration:arises when a retailer performs some distributionand manufacturing activities, such as operating warehouses ordesigning private label merchandise.

Forward integration: is when a manufacturer undertakes retailingactivities, such as Ralph Lauren operating its own retail stores.


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Accounting Finance

MISOperations

Marketing

Human Resources

Retailers are a Business Like Manufacturers


7/26PPT 1-7 Consumer Behavior Ignacio J. Vzquez E. 2007

Decision Variables for Retailers

Customer Service

Store Designand Display

MerchandiseAssortment

Communication

Mix

LocationPricing

Retail

Strategy



Functions Performed by Retailers

Providing Assortments: Supermarkets typically carry 20,000 to 30,000

different items made by over 500 companies. Offering an assortment enables

their customers to choose from a wide selection of brands, designs, sizes,

colors, and prices at one location.

Breaking Bulk: To reduce transportation costs, manufacturers and

wholesalers typically ship cases of frozen dinners or cartons of blouses to

retailers. Retailers then offer the products in smaller quantities tailored to

individual consumersand householdsconsumption patterns.

Holding Inventory: A major function of retailers is to keep inventory that is

already broken into user-friendly sizes so that products will be available

when consumers want them. Thus, consumers can keep a smaller inventory

of products at home because they know local retailers will have the productsavailable when they need more. By maintaining an inventory, retailers

provide a benefit to consumers; they reduce the consumerscost of storingproducts.



Providing Services: Retailers provide services that make it

easier for customers to buy and use products. They offer credit

so consumers can have a product now and pay for it later. They

display products so consumers can see and test them before

buying.

Increasing the Value of Products and Services: By

providing assortmentsbreaking bulk, holding inventory, andproviding services, retailers increase the value consumers

receive from their products and services.

Contd.



Opportunities in Retailing

Management Opportunities:To cope with a highly competitive andchallenging environment, retailers are hiring and promoting people with awide range of skills and interests. Students often view retailing as a part ofmarketing because the management of distribution channels is part of amanufacturers marketing function. But retailers operate businesses and, likemanufacturers, undertake most traditional business activities. Retailers raise

capital from financial institutions; purchase goods and services; developaccounting and management information systems to control operations;manage warehouses and distribution systems; design and develop new

products and undertake marketing activities such as advertising,promotions, sales force management, and market research.

Entrepreneurial Opportunities:Retailing also provides opportunities forpeople who wish to start their own business. Some of the worlds richestpeople are retailing entrepreneurs



Social and Economic Significance of

Retailing Support for Community:Retailers are also responsible for

developing many innovative products and services.

Retail Sales:Retailing affects every facet of life. Just think of howmany daily contracts you have with retailers when you eat meals,

furnish your apartment, have your car fixed, and buy clothing for apart or job interview.

Employment:Retailing also is one of the nations largest industriesin terms of employment.

Global Retailers:With worldwide retail sales estimated at $8Trillion, the 20 largest retailers represent a 12 percent share of theworld market.



Economic Significance of Retailing

Retail industry is one of the pillars of Indian economy and accounts for 1415% ofits GDP

The Indian retail market is estimated to be US$ 450 billion and one of the top five

retail markets in the world by economic value

India is one of the fastest growing retail market in the world, with 1.2 billion

people India's retail and logistics industry employs about 40 million Indians (3.3%

of Indian population).[5]

India's retailing industry essentially consists of the local mom and pop store, owner

manned general stores, convenience stores, hand cart and pavement vendors, etc.[

Organised retail supermarkets account for 4% of the market as of 2008

Regulations prevent most foreign investment in retailing

Management training opportunities

Entrepreneurial opportunities
http://en.wikipedia.org/wiki/Retailing_in_Indiahttp://en.wikipedia.org/wiki/Small_businesshttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/Economy_of_Indiahttp://en.wikipedia.org/wiki/Small_businesshttp://en.wikipedia.org/wiki/Small_businesshttp://en.wikipedia.org/wiki/Small_businesshttp://en.wikipedia.org/wiki/Small_businesshttp://en.wikipedia.org/wiki/Small_businesshttp://en.wikipedia.org/wiki/Small_businesshttp://en.wikipedia.org/wiki/Small_businesshttp://en.wikipedia.org/wiki/Retailing_in_Indiahttp://en.wikipedia.org/wiki/Retailing_in_Indiahttp://en.wikipedia.org/wiki/Retailing_in_India



Retailing Industry in India is estimated at INR 15.5 trillion growing at CAGR

of 15 to 20 %

Organized Retail accounts for 5-8% which is lowest compared to its peers inBRIC countriesBrazil (38%), Russia (33%) and China (20%)

The Organized Retail has been growing at 35% CAGR

The retail and wholesale sector in India accounts for approx 14% of GDP

In terms of employment, the sector is second largest employer providing over

10% of all formal jobs

Indian retail has evolved into a major growth opportunity



India has witnessed a robust growth rate of 9% p.a. from 2005 to

2008 and an impressive growth of 6.7% in 2009 despite the global

downturn& 4.7 % in 2013-14

Government is committed to encourage inclusive growth 72.2%

of Indiaspopulation resides in rural areas

High agriculture growth rate offers huge potential Householdsforming richclass have grown at CAGR of 35% during and that

of Major consuming classhave grown at a CAGR of 11 %

Supported by Strong Economic Fundamentals



THE GROWTH FACTORS OF THE RETAIL SECTOR OF

INDIAN ECONOMY

Increase in per capita income which in turn increases the

household consumption

Demographical changes and improvements in the standard of

living

Change in patterns of consumption and availability of low-cost

consumer credit

Improvements in infrastructure and enhanced availability of

retail space

Entry to various sources of financing



The future trends of the retail sector of

Indian economy

The retail sector of Indian economy will grow up to 10% of

total retailing by the year 2012.

No one single format can be assumed as there is a huge

difference in

cultures regionally.

The most encouraging format now would be the hypermarts The hypermart format would be further encouraged with the

entry of the TNC's



The Retail Management Decision Process

Competitors: At first glance, identifying competitors appears easy. A

retailers primary competitors are other retailers using the same format.

Thus, department stores compete against other department stores and

supermarkets against other supermarkets. This competition between the

same types of retailers is called intratype competition.

Variety: To appeal to a broader group of consumers, many retailers are

increasing the variety of their merchandise. Variety is the number of

different merchandise categories within a store or department. By offering

greater variety in one store, retailers can offer one-stop shopping to satisfy

more of the needs of their target market.

Scrambled Merchandising: The offering of merchandise not typically

associated with the store type, such as clothing in a drug store, is called

scrambled merchandising. Scrambled merchandising increases intertype

competition, or competition between retailers that sell similar

merchandise using different formats, such as discount and department

stores.



Customers:The second factor in the microenvironment is customers.

Customer needs are changing at an ever-increasing rate. Retailers mustrespond to broad demographic and lifestyle trends in our society, such as the

growth in the elderly and minority segments of the US population and the

importance of shopping

Retail Strategy:indicates how the firm plans to focus its resources to

accomplish its objectives. It identifies

1) the target market, or markets, toward which the retailers will direct its

efforts;

2) the nature of the merchandise and services the retailer will offer to satisfy

the needs of the target market; and

3) how the retailer will build a long-term advantage over its competitors.

Strategic Decision Areas:The key strategic decision areas for a firm involve

determining its market, financial, location, organizational structure, and

human resource, information systems, and supply chain, and customer

relationship management strategies.

Contd.



Retail Mix:To implement a retail strategy, management develops a retail

mix that satisfies the needs of its target market better than that of its

competitors. The retail mix is the decision variables retailers use to satisfy

customer needs and influence their purchase decisions.

Ethical and Legal Considerations:When making the strategic and tactical

decisions discussed previously, managers need to consider the ethical and

legal implications of their decisions in addition to the effects those

decisions have on the profitability of their firms and the satisfaction of

their customers. Ethics are the principles governing the behavior of

individuals and companies to establish appropriate behavior and indicate

what is right and wrong.

Contd.



Retail Structure in India



Company Size

Pantaloon Retail Ltd(Future Group venture)

Over 2 million sq ft of retail space spread over 35 citieswith 65 stores and 21 factory outlets

Shoppers Stop

(K Raheja Group venture)

Over 3.21 million sq ft of retail space spread over 23 cities

with 51 stores

Spencer Retail

(part of RP-SG Group)

Retail footage of close to 1 million sq ft across 45 cities

with 200 stores

Lifestyle Retail

(Landmark Group venture)Approximately 15 lifestyle and eight Home Centre stores

Bharti Retail

74 Easyday stores with plans to invest about 2.5 billion

USD over the next five years to add about 10 million sq ft

of retail space in the country

Reliance Retail 700 stores with a revenue of 7,600 crore INR

Aditya Birla More575 stores with approximate revenue of 2,000 crore INR.

Recently, purchased stake in Pantaloon Retail

Tata Trent59 Westside stores, 13 Starbazaar hypermarkets and 26

Landmark bookstores

Retail Companies in India


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Organised Retail Structure in India


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Nature of Retail Industry is Changing

Mom and Pop Store

To Todays Retailer


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Trends in Retail Industry

Growing Diversity in Retail Format

Increasing Industry Concentration

Globalisation


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Factors Underlying Trends of Modern

Retail in India

Economic development

Improvements in civic situation

Changes in government policies

Changes in consumer needs, attitudes and behavior

Increased investment in retailing

Rise in power of organized retail


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Economic Significance of Retailing in India

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