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Introduction To Retail

Retail is defined as the sale of goods in small quantities to consumers. It involves activities related to marketing goods and services directly to end users. Retail is the largest private industry worldwide, accounting for $6.6 trillion in total sales. Retailers add value for customers by providing goods in convenient locations and times and facilitating ownership transfers. The retail landscape is changing due to proximity to customers, rising consumerism, private labels, and new technologies. While retail is growing in India, its development faces roadblocks like a lack of infrastructure and complex taxation systems. However, the future of retail in India is bright with potential for expansion to smaller towns and penetration of discount stores.

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6K views13 pages

Introduction To Retail

Retail is defined as the sale of goods in small quantities to consumers. It involves activities related to marketing goods and services directly to end users. Retail is the largest private industry worldwide, accounting for $6.6 trillion in total sales. Retailers add value for customers by providing goods in convenient locations and times and facilitating ownership transfers. The retail landscape is changing due to proximity to customers, rising consumerism, private labels, and new technologies. While retail is growing in India, its development faces roadblocks like a lack of infrastructure and complex taxation systems. However, the future of retail in India is bright with potential for expansion to smaller towns and penetration of discount stores.

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© Attribution Non-Commercial (BY-NC)
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INTRODUCTION TO RETAIL

WHAT IS RETAIL

 Retail : Derived from the French word “retaillier”


 Means : To cut off a piece or to break bulk.

 Retailer : Defined as a dealer or trader who sells goods in


small quantities, or
one who repeats or relates
 Retailing : The last stage in movement of goods or
services to
the consumer.

 Retailing can thus be defined as consisting of all such


activities
involved in the marketing of goods and services directly to
the
INTRODUCTION TO RETAIL

RETAIL : THE INDUSTRY

 Largest private industry in the world, total sales of US$ 6.6


trillion
 In Western economy it accounts for 8% of the GDP

 Has generated an 19% return for the shareholders


between 2004-
06
 In comparison banks generated 9% and insurance
generated
15.2% return.
 Largest corporation in the world – Wal-Mart is a retail chain

 Almost 50 retail organizations in the world feature in the


list of
INTRODUCTION TO RETAIL

FUNCTIONS OF A RETAILER

 From customers point of view, retailer serves by


providing goods that he needs in the required
assortment and at the right place and time.

 From an economic standpoint the role of a retailer


is to provide real added value or utility to the
customer.

 This comes from five different perspectives


INTRODUCTION TO RETAIL
FUNCTIONS OF A RETAILER

 First utility arises from the need of providing a finished


goods and services in the form that is acceptable to the
customer

 The retailer performs the function of storing the goods,


and providing us with an assortment of products in
various categories

 The retailer creates time utility by keeping the store


open when the consumers prefer to shop

 By being available at a convenient location he creates


place utility

 Finally when he products are sold ownership utility is


INTRODUCTION TO RETAIL

FUNCTIONS OF A RETAILER

All these are real benefits which the Retailer offers by

 Being close to potential customers

 Fully understanding the motivating factors that drive


their customers

 By serving the consumers by way of functioning as a


marketing intermediary and creating time, place and
ownership utility
INTRODUCTION TO RETAIL

FUNCTIONS OF A RETAILER

The Retailer also serves the manufacturers by

 Performing the function of distributing the goods to the


end users

 Creating a channel of information from manufacturer to


the consumer

 By serving as a final link in the distribution chain

 Recommending products where brand loyalty is not


strong or for unbranded products.
THE CHANGING RETAIL
LANDCSAPE
REASONS FOR THE CHANGING RETAIL
LANDSCAPE
 Proximity to customers : The emergence of large super
markets, hypermarkets and various other formats like the
department stores.

 The rise of consumerism : Retailer faces a knowledgeable and


demanding consumers. This has forced retail organizations to
change formats, product offerings and services.

 Introduction of the private label : Retailers now decide on


products and brands they want to stock. Some have even
developed their own in store brands/products that cater to the
needs of target customers.

 Technology : Increasing use of technology vide point of sale


scanning, use of bar code provides wealth of information to
RETAIL IN INDIA
 India boasts of the world’s largest retail network, 12 million
outlets
 India being second largest consumer market in the world
stands benefited
 96% of total number of retail outlets have an area of les than
500 sq.ft. and the per capita retail space in India is a mere 2
sq.ft.
 Trade is highly fragmented and is known the world over as
highly unorganized and in nascent form
 However, the reality is that apart from agricultural products
even manufactured goods are available in the remotest corners
of India
 As retail is not regarded as an industry in India it is difficult to
get a correct picture of the size of this sector
 As per estimates given by the Central Statistical Organization
the total private final consumption expenditure in India was
Rs.15,000 billion in 2001-2002
 Consumption patterns indicate how much has been sold
GROWTH OF RETAIL IN INDIA
 India Government set up public distribution system faced with
the task of providing basic grains to the mass populace – ration
shops
 State run retail stores were set up such as Khadi & Village
Industries Commission stores (KVIC). As on date there are more
than 7,000 stores across the country.
 The co-operative movement was championed by the
government, which set up Kendriya Bhandars in 1963. As on
date they operate from a network of 112 stores and 42 fair
price shops across the country.
 Mother diary another early starter controls as many as 250
stores selling foods and provisions at attractive prices
 In Maharashtra, Bombay Bazaar, which operates stores under
the label Sahakari Bhandar and Apna Bazaar runs a large chain
of co-operative stores
CLASIFICATION OF RETAIL SECTOR

 In India, Retail Sector is classified into two broad


categories

4. Food
5. Non Food

 Through this classification one can see a


phenomenal change that has occurred in retail in
India

 Key Players have emerged in various sectors over


the past ten years
ROADBLOCKS TO RETAIL
DEVELOPMENT
 In India, organized retail is a little over a decade old
 It is largely an urban phenomenon
 However the pace of growth is still slow

Reasons for slow growth in retail

1. Retail not being recognized as an industry in India


- Hampering the availability of finance to existing
and new players
- Hence affecting growth and expansion plans

2. High costs of real estate


- Lease or rent of property is major area of
expenditure
- This eats into the profitability of a project
ROADBLOCKS TO RETAIL
DEVELOPMENT
3. Lack of adequate infrastructure
- Poor roads, lack of cold chain infrastructure
- Existing supermarkets and food retailers have to invest
substantially in building cold chain infrastructure

4. Multiple and complex taxation system


- Sales tax rates vary from State to State
- Organized players have to face multiple point control and tax
system
- Tax evasion by small stores
- Hence it becomes expensive to transfer goods from one store
to another

5. Foreign direct investment


- FDI in pure retailing is not permitted
- One of the prime reason for slow growth of retail in India
- Global retailer can enter only by way of a franchise with Indian
partner
FUTURE PROSPECTS

 Bright future ahead


 What one sees today is only the tip of the iceberg
 Expansion from urban to B Class towns will see the
emergence of region specific formats which will be scaled
down
 Large discount stores are bound to emerge as they will cater
to mass market
 Thus penetration in the lower income groups
 This is the format that is most likely to meet the consumer’s
demands for “increased value for money” offerings
 The new agreement on textiles and clothing (ATC) will see
large number of international retailers setting shop in India
 Indian retailers would have to become consumer-centric in
true sense
 Retailers will have to reinvent themselves and have to go
beyond the traditional products and services

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