Trends in Retailing by Karuna_Shalet

8/8/2019 Trends in Retailing by Karuna_Shalet

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TRENDS IN RETAILING


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Traditional

Retailing

The emergence of the neighborhood Kirana stores catering to the

convenience of the consumersEra of government support for rural retail: Indigenous franchise modelof store chains run by Khadi & Village Industries Commission

1980s Experienced slow change as India began to open up economyTextiles sector with companies like Bombay Dyeing, Raymond's, S

Kumar's and Grasim first saw the emergence of retail chainsTitan successfully created an organized retailing concept and

established a series of showrooms for its premium watches

1990s Fresh wave of entrants with a shift from Manufactures to PureRetailers

Emergence of shopping centers, mainly in urban areas, with facilities

like car parking targeted to provide a complete destination experiencefor all segments of societyEmergence of hyper and super markets trying to provide customer

with 3 Vs - Value, Variety and Volume

2000-Present Expanding target consumer segmentThe Sachet revolution - example of reaching to the bottom of thepyramid

Industry Evolution


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Weekly MarketsVillage FairsMelas

Convenience StoresMom and Pop/Kiranas

PDS OutletsKhadi StoresCooperatives

Exclusive Brand OutletsHyper/Super Markets

Department StoresShopping Malls

Traditional/PervasiveReach

GovernmentSupported

Historic/RuralReach

Modern Formats/International

Evolution of Indian retail

Source of Entertainment

NeighborhoodStores/Convenience

Availability/ LowCosts / Distribution

ShoppingExperience/Efficiency


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Retailing formats in IndiaRetailing formats in India


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C ontd..C ontd..


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FO RMAT %SHAREHypermark et 38 %

Supermark et 28 %

Spec ialty Stor e 22%

C ash N carry 16 %

De partm ent Stor es 2%

FormatFormat- -wise urban investments in retail expected in next 5 years wise urban investments in retail expected in next 5 years

Source: Technopak Analysis


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Mark et O verviewMark et O verview


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U norganized : Vast majority of th e twe lve million stor es ar e small "father and son"outl ets

Fragmented : Mostly small individuallyowned busin esses, average size of outl etequals 50 s. q. ft.Though India has th e highestnumb er of r etail outl ets p er capita in th e world, th e retail space per capita at 2 s. q. ftper p erson is amongst th e lowest.

Rural bias: Nearly t wo thirds of th e stor esare located in rural ar eas. Rural r etail industryhas typi cally two forms: "Haats" and Melas".Haats ar e the wee kly mark ets : s erve groups

of 10-50 villages and s ell day-to-daynece ssities. Melas are larger in size and mor e sophisti cated in t erms of th e goods sold (lik e TVs)

Traditionally three factors have plaguedthe retail industry:

Experimentation with formats: Retailing in Indiais still evolving and th e sec tor is witnessing a seriesof experiments a cross th e country with new formatsbeing tested out. E x. Quasi-mall, sub-urban dis countstor es, C ash and carry etc.

Store design : Biggest challenge for organis edretailing to create a custom er-pull environm entthat in creases th e amount of impuls e shopping.Research sho ws that th e chances of senses dictatingsales are upto 10-15 %.Retail chains lik e MusicWorld,Baristas, Piramyd and Globus ar e laying majoremphasis & investing heavily in store design.

Emergence of discount stores: T hey are expected to sp earh ead th e organis ed retailingrevolution. Stor es trying to emulate the mod el of Wal-Mart. Ex. Big Bazaar, Bombay Bazaar, RPGs.

U norganized retailing is getting organized: Tomee t th e challenges of organiz ed retailing such aslarge cineplexe s, and malls, which are back ed by th e corporat e house such as ' Ansals' and 'P VRthe unorganiz ed sec tor is g etting organiz ed. 25 stor es inDe lhi under th e banner of Provision mart ar e joininghands to combin e monthly buying. Bombay Bazaarand Efoodmart form ed which are aggregations of Kiranas.

Recent changes:

Rece nt TrendsRece nt Trends


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Latest Trends In RetailingLatest Trends In Retailing

y Emergence of multiple franchisee model L argely adopted by companies offering products in value and semi-premium branded segments to enable greater scale, limitdependence on a few players and leverage local hands-onknowledge of the market.

E.g. Jumbo King, PepsiCo India

y Rural retailing

Rural India accounts for more than 70 per cent of all Indianhouseholds and close to two-fifths of the total consumption pie.Retail companies have realised the importance of tapping the ruralconsumer base.

E.g. DCM Shriram's and ITC's .


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y Collaborative model for international products

Joint ventures (JVs) are emerging as the preferred model for newentrants, wherein foreign players leverage the knowledge of thelocal player and focus on key issues such as quality, pricing,promotions and brand management.

E.g. BhartiGroup JV with Wal-Mart for retail and wholesale retail

Staples JV with Pantaloon Retail L td to launch its products

y Vertical integration

Retail companies are looking at integrating their business modelsvertically to explore additional sources of revenues.

E.g. DaburIndia L tds retail foray into health and beauty retailbusiness through a retail chain known as NewU,

Nokia opening its concept stores


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y Collaboration in back-end resource sharing A nother interesting trend in the Indian retail market is thecollaboration of back-end resources by aligning their sourcingoperations and sharing private labels, logistics, warehouses andhiring details on a transactional payment basis.E.g. Future Group, the A dityaBirla Group, the RPG Group

Reliance Group have come together to reduce their operationalcosts and improve margins


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y Increasing market reach Retail companies now seek to increase their footprint in Tier II, III, IVcities and towns to capture the domestic demand.E.g. Raymond Group has plans to open more than 200 stores acrossthe country by mid-2011

Tata Group's retail venture, Westside, is planning to expand itsfranchisee base in Tier II and Tier III cities

y Innovation in new retail formats Retailers are not only investing in their operations, but are alsoexploring the possibility of adopting new business models or formats.

E.g. Reliance Retail has devised a new business model under which itwill open small employee-friendly retail outlets at the premises of largecorporate organisations.The Network18 group has ventured into online and on-air retailmarketing and distribution through HomeShop18


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Indian consum ers ar e evolvingFrom traditional to

. mod ernized traditional

From globaliz e to

Indianis e

From fun ctional to

lif estyle

Evolvingconsum er pr ef erences !Evolvingconsum er pr ef erences !


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Indian consum ers ar e evolvingFrom valu e for mon ey to

valu e for tim e and convenienceFrom cautious to

. experimentationFrom ov er-th e-count er to

tou ch-and-f ee l

Evolvingconsum er pr ef erences !Evolvingconsum er pr ef erences !


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Key PlayersKey Players


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Final words..

Message to Retailers: Evolve your all strategies around customers. Focus on building brands to reap the fruits in future. Keep growing.Cu

stomers is king of Past and now the Emperor of F u t u re.

Message to Cu stomers: Enjoy the Kingdom of Retailers


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Trends in Retailing by Karuna_Shalet

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