Global Retailing Scenario

& Its Future

By: Varun modi ROLL NO. 4472

INTRODUCTION TO RETAILING
Retailing consists of the sale of goods or merchandise for personal or household consumption either from a fixed location such as a shopping mall or store, or from a fixed location and related subordinated services. In commerce, a retailer buys goods or products in large quantities from manufacturers or importers, either directly or through a wholesaler, and then sells individual items or small quantities to the general public or end-user customers, usually in a shop, also called a store. Retailers are at the end of the supply chain. Marketers see retailing as part of their overall distribution strategy.

Etymology
Retail comes from the French word retaillier which refers to "cutting off, clip and divide" in terms of tailoring (1365). It first was recorded as a noun with the meaning of a "sale in small quantities" in 1433 (French). Its literal meaning for retail was to "cut off, shred, paring". In both Dutch and German also refer to sale of small quantities or items.

Shopping
Shopping is the purchase of goods and services from retailers.Shopping involves selection and purchase "Window shopping" is an American/English phrase meaning to look into glass windows of a shop for entertainment and imagine purchasing items without actually purchasing, possibly just to pass the time between other activities, or planning a purchase. Screen shopping" is derived from this term but applies to online retail stores (i.e., window shopping through a computer screen). Internet Shopping(eBay, Amazon) Shopping is fun for some people.

Classifying Retail

Modern Format retailers (Organized retailing) Supermarkets (Subhiksha) Hypermarkets (Big Bazaar) Department Stores (Shoppers Stop) Cash & carry (wal-mart yet to come) Company Owned Company Operated (Bata) Traditional Format Retailers (Unorganized Retailing) Traditional Mom and Pop Stores: (KIRANA) Kiosks Street Markets Exclusive /Multiple Brand Outlets

Hypermarket
Hypermarket is a superstore which combines a supermarket and a department store. Gigantic retail facility carries an enormous range of products under one roof. A consumer can ideally satisfy all of his or her routine weekly shopping needs in one trip to the hypermarket. A typical Wal-Mart Supercenter covers 150,000 square feet, A typical Carrefour 210,000 square feet Hypermarkets choose suburban or out-of-town locations that are easily accessible by automobile. The concept was pioneered by Carrefour upon opening its first such store in 1962 at Sainte-Genevive-des-Bois, France

In France, the dominant chain is Carrefour 2nd largest chain of hypermarkets in the world after Wal-Mart

Supermarket
A supermarket is a departmentalized self-service store offering a wide variety of food and household merchandise. It is larger in size and has a wider selection than a traditional grocery store. The traditional supermarket occupies a large floor space on a single level and is situated near a residential area in order to be convenient to consumers The first true supermarket in the United States was opened by ex-Kroger employee Michael J. Cullen, on August 4, 1937, in a 6,000 square foot (560 m) former garage in Jamaica, Queens, New York

Department Store
Department stores usually sell products :
Apparel Furniture Electronics Appliances Paint Toiletries & Cosmetics Photographic equipment Jewellery Toys Sporting goods.

Convenience store
A convenience store is a small store or shop, generally accessible or local. Alongside ,busy roads, gas/petrol stations. Railway stations,densely-populated urban neighborhoods.

For meeting immediately or temporarily requirements.

Items offered are milk, bread, soft drinks, cigarettes, coffee, slurpees, candy bars, sandwiches, pizza hot dogs, ice cream, candy, gum, chips, popcorn, maps, magazines, newspapers, small toys, feminine hygiene products, cat food, dog food, and toilet paper. CD, DVD, video game

Cash and Carry

Goods are sold from a wholesale warehouse operated either on a selfservice basis or on the basis of samples retailers Professional users, caterers, institutional buyers are customers Wholesalers buy from manufacturers and sell mostly to retailers Selling and promoting, buying and assortment building, warehousing, transporting, financing, risk-bearing, supplying market information, and providing management services Cash and carry wholesaler arrange the transport of the goods themselves and pay the goods in cash and not on credit 100% FDI is allowed in this format in INDIA. WAL-MART & BHARTI. Joint venture based on this strategy. METRO(GERMANY), CARREFOUR(FRANCE),TESCO(U.K) planning to enter through the same format.

Other retailing Formats

Kiosk Variety store

World`s largest Malls

Berjaya Times Square in Kuala Lumpur, Malaysia, is 700,000 m. (approximately 7 million square feet). Beijing's Golden Resources Shopping Mall, opened in October 2004, is the world's largest, at 600,000 m (approximately 6 million square feet). SM Mall of Asia in the Philippines, opened in May 2006, is the world's third largest at 386,000 m square meters of gross floor area with further expansions still ongoing. The Mall of Arabia inside Dubailand in Dubai, United Arab Emirates, which will open in 2008, will become the largest mall in the world, at 929,000 square meters (10 million sq. feet).(22000 small shops of avg 50 sq.yds in india)

Global Retailing Facts

Worlds largest private industry

Above US $ 8 trillion sales worldwide annually

Accounts for almost 10% of GDP in most Major employer in most economies 16% 15% 12% 7% in US in Brazil in Poland in China countries

Generates competition which results in

reduction of prices product and service innovation enhanced customer experience

Major driver for real estate and urban development

Biggest retail Sales countries of the world

U.S
E.U JAPAN CHINA U.K

U.S $ 4 tn (13 times of Indian market)

U.S $ 2 tn U.S $ 1 tn U.S $ 750 bn U.S $ 444 bn

INDIA
RUSSIA

U.S $ 300 bn
U.S $ 200 bn

Biggest retailers of the World

U.S.A
FRANCE

US $316 Bn
US $95 Bn

U.S.A
U.K U.S.A

US $73 Bn
US $62 Bn US$56 Bn

Reason For Success of Global Retailers

Better Consumer Demand
Better Consumer Confidence

Computer Operated Depots

Better Logistical System

Evolution of Indian retail

Historic/Rural Reach Traditional/Pervasiv e Reach Government Supported Modern Formats/ International

Exclusive Brand Outlets Hyper/Super Markets Department Stores Shopping Malls

PDS Outlets Khadi Stores Cooperatives

Convenience Stores Mom and Pop/Kiranas Weekly Markets Village Fairs Melas
Source of Entertainment
Neighborhood Stores/Convenience

Availability/ Low Costs /

Shopping Experience/Efficiency

Evolution of Indian retail

Informal retailing Sector Typically small retailers. Evasion of taxes Difficulty in enforcing tax collection mechanisms No monitoring of labor laws Formal Retailing Sector Typically large retailers Greater enforcement of taxation mechanisms High level of labor usage monitoring

Large Indian retailers

Hypermarket

Big Bazaar Giants Shoprite Star Lifestyle Pantaloons Piramyds Shoppers Stop Trent Fame Adlabs Fun Republic Inox PVR

Department store

Entertainment

The changing Indian consumer

Greater per capita income Increase in disposable income of middle class households 20.9%* growth in real disposable income in 99-03. Growing high and middle income population Growing at a pace of over 10%* per annum over last decade Affordability growth Falling interest rates Easier consumer credit Greater variety and quality at all price points

From Euromonitor Retail Survey

The changing Indian consumer

The urban consumer Getting exposed to international lifestyles Inclined to acquiring asset More discerning and demanding than ever
No longer need-based shopping Shopping is a family experience Changing Mindset Increasing tendency to spend Post Liberalization children coming of age 100 mn 17-21 year olds*. Tend to spend freely. Greater levels of education

Anticipated growth

Market size Current market size is roughly US$ 300 bn Only 3% is through organized retailing 96% of the 12 Million stores are less than 500 Sq. ft. Forecast Growth rate for the retailing industry is roughly 8.3% for 2003-2008 Sales from large format stores would rise by 24-49% Formal and modern format retailing would enjoy rapid growth

India`s growing no. of domestic retail chains

FDI in Indian retailing

Current Indian FDI Regime FDI not permitted in retail trade sector, except in: Hi-Tech items / items requiring specialized after sales service Medical and diagnostic items Items sourced from the Indian small sector (manufactured with technology provided by the foreign collaborator)

FDI in Indian retailing

No FDI is allowed in multiple brand retailing
100% FDI allowed in cash & carry format(e.g Walmart-Bharti)

51% FDI allowed in single brand retailing(Nike,Gucci,Versace,Mcdonal d)

How FDI ?

FDI should be allowed in stages Initial stages: 26% FDI

3 yrs.

Establishment Phase: 49% FDI Mature Phase: 100% FDI

3 yrs.

FDI policy No incentives needed to attract FDI Market size and potential are sufficient inducers No need for costly tax breaks, import duty exemptions, land and power subsidies, and other enticements

Hot Destinations
Tier 1 cities: Delhi,Mumbai,Kolkata,Chennai Tier 2 cities: Hyderabad, Bangalore, Ahmedabad, Gurgaon, Pune, Baroda,Noida

Tier 3 cities:
Chandigarh, Coimbatore, Trivandrum, Faridabad, Ludhiana, Cochin, Shimla, Mysore,Amritsar

Prevailing Forthcoming Major Players Mammoths

Future Group Trent Ltd RPG Enterprise Vishal Retail Ltd Bata India Ltd
Provogue India Ltd Reliance Retail
Bharti Retail

Birlas Godrej Adhaar

ITC e-choupal

Shoppers Stop Ltd Tatas

Case study : Chinese retailing

FDI permitted in 1992. 40 foreign retailers have secured approval Retail sales have grown@19.5% yoy since FDI was permitted FDI initially restricted to 6 major cities (including Beijing, Shanghai and Guangzhou) and SEZs Foreign ownership initially restricted to 49% US$ 22 bn of FDI attracted, 3.6% of total FDI In 2003, FDI in wholesale and retail was US$ 1.1 bn (Around 30% of our total FDI in 2003) Current restrictions on FDI will be phased out over 5 years as condition of WTO entry

375 300
US$ bn

225

150
75

FDI in retail allowed

7 8

8 0

8 5

9 0

9 1

9 2

9 3

9 4

9 5

9 6

9 7

9 8

9 9

0 0

0 1

0 2

Years

Retail sales grew @ 19.5% yoy for the next 4 years after the introduction of FDI in 1992

Current News
Eleven retailers gearing up for IPOs 40 retail players to spend $25 billion in next four years

Aditya Birla Group signifies intent to become leading player in retail industry Big Bazaar to open 60 new stores Shoppers Stop gears up for luxury retail Reliance targets Rs. 100000 crs. Retail sales target Dabur explores entering consumer retail business The retail industry in India is estimated at $427 billion in 2010 and US$ 637 billion in 2015

Recommendations

Grant industry status to retail Permit FDI in Retail in phases Invest in supply chain infrastructure Ease distribution infrastructure creation, octroi Ensure single window clearance for retail chains
Organize market for real estate Ensure proper rent laws Enforce zoning laws and city development plan Increase land supply

Ensure flexibility of labor laws

You Will always Shop In This Way in Future !

THANKS !! THANKS