UNIT - I

 Retail is derived from

the French word
retailer, meaning to
cut price off or to
break bulk.
 Retailing is the last
stage in the
movement of goods
and services to the
consumer.
 According to Kotler:
“Retailing includes
all the activities
involved in selling
goods or services to
the final consumers
for personal, family
use”
 A retailer is a business
that sells products and
services to consumers
for their personal or
family use.
 A distribution channel
is a set of firms that
facilitate the
movement of products
from the point of
production to the point
of sale to the ultimate
consumer.
Manufacturing Wholesaler Retailer consumer
Manufacturer Manufacturer Manufacturer

Wholesaler

Retailer
Feedback

Retailer

Consumer Consumer Consumer

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The four P’s of retailing that enhance
the sale of a products are;
 Passion
 Possession
 Place
 Pleasure
 The term Passion may refer to feeling very
strongly about a subject or product, usually
referring to feelings of intense desire and
attraction, is very passionate about
something.
 It generally shows the attitude/eagerness of
a customer towards a product that he/she
buys. i.e. to what extent the customer is
addicted to buy a product.
 E.g when BAJAJ launched Pulsar many of the
youngsters have eagerness to buy it.
 It is generally seen that whenever a
firm/brand/company launches a new
product for which the customers have
been waiting for a long time, possess
an eagerness to avail the product or
service as so possible.
 The place refers to placement
(usually managed by sales),
such as having the product
available where and when
targeted customers want to
buy it.
 Pleasure is commonly conceptualized as a
positive: experience, happiness,
entertainment,
enjoyment.
 However, is a difficult concept to define as
the experience of pleasure differs from
individual to individual.
 McDonold  Lifestyle
 Titan Industrial Ltd. International Pvt.
 Reliance Ltd.
 The Bombay Dyeing  Bharat Petroleum
& Manufacturing Corporation Ltd.
Co. Ltd  ShoppersStop
 Cafe Coffee Day
 Madura Garments
 Raymond Ltd.,
Major Brands (India)
 TCS Textile Pvt. Ltd.
Pvt. Ltd.
(The Chennai Silks)
 Providing Assortments
 Breaking Bulk
 Holding Inventory
 Providing Services
 Communicating
 Advertising and PoP Display
 Transportation
 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,
colours and prices at one
location.
 Supermarket provide
assortments of food,
health and beauty care,
household products, and
clothing .
 Breaking bulk is
important to both
manufacturers and
consumers.
 Whereas it is cost
effective for
manufacturers to
package and ship
merchandise in large,
rather than smaller,
quantities, consumers
want to purchase
merchandise in smaller,
more manageable
quantities.
 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.
 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.
 Some retailers have
salespeople in stores or
use their web sites to
answer questions and
provide additional
information about
products.
 The retailer being an intermediary offers
two way communication between the
manufacturer and customer.
 The manufacturer learns through the
retailer regarding customer feedback,
product performance, sales forecast,
corporate image etc.
 The impulsive nature of customers demand
that while taking purchase decisions inside
the retail outlet, they should be reminded
about the product.
 The Point of Purchase display acts as a
reminder for the informed customer and as a
piece of information for the learner.
 What do you mean by retail environment?
A retail marketing environment consists of
the external forces that affect the retailers
ability to develop and maintain successful
transactions and relationships with its target
customers.
The macro environment consists of
social, economic and technological forces.
 The implication of socially responsible
marketing is that retail firms should take the
lead in eliminating socially harmful products
such as cigarettes and other harmful drugs etc.
 There are innumerable pressure groups such
as consumer activist, social workers, mass
media, professional groups and others who
impose restrictions on marketing process and
its impact may be felt by retailers in doing
their business.
 The society that people grow up in shapes
their basic beliefs, values and norms.

 Retailers provide value to their
communities society, as well as to
their customers.
 Retailers are also responsible for
developing many innovative products
and services.
 Retail marketing firms are vulnerable to
economic conditions, both directly and
through the medium of market place.
 For example, the cost of all inputs positively
respond to upward swing of economic
condition – which will affect the output price
and consequently affect the sales.
 The effect on consumers also influences the
marketing through changes in consumer
habits. This is an indirect influence.
 Size & Position in the current Scenario

The Indian Retail

Sector, currently
the Fifth largest in
the world, is
poised for
Current Size & Future growth of Organized Retail in India
phenomenal
growth in the
coming years

ORGANISED RETAIL EXPECTED TO GROW 35-40% CAGR

Source: India Shopping Trends, 2008 - Technopak

 In the following areas where
technology have been extensively used.
 Packing of the products
 Printing the name of the shop on the
product visibly
 Weighing machine
 Modern refrigerators where merchandise
can be used for a long time and
 Billing.
Rank Retailer Head Quarters No. of countries

1 Wal-Mart Stores US 11

2 Carrefour France 31

3 Home Depot US 4

4 Kroger US 1

5 Metro German 26
Year Revenue % Growth
$ Million

2009 12,104.0 4.70

2008 11,561.5 4.80

2007 11,029.1 5.10

2006 10,496.3 5.20

2005 9.981.1 5.10

2004 9,498.5 5.5

Country Share of retail in total employment

India 6 – 7%

China 6%

Poland 12%

Brazil 15%

USA 11.7%

Korea 18%
Global Rank Retailer Number of Employees

1 Wal-Mart 17,00,000

314 McDonald’s 4,38,000

22 Carrefour 4,30,000

82 Target 2,92,000

67 Kroger 2,89,000

34 Home Depot 2,73,000

 The emergence of new markets
 The Empowered consumers
 Technology enabled efficiencies
 The rise of the e-tailing
 Retailnot being recognized as an
industry in India
 The high costs of real estate
 High stamp duties
 Lack of adequate infrastructure
 Multiple and complex taxation
system
 Management Opportunities
◦ Retailers raise capital from financial institutions; purchase
of goods and services; develop accounting and
management information system to control operations;
mange warehouses and distribution systems; design and
develop new products; and undertake marketing activities
such as advertising, promotions, sales force management,
and market research.
◦ Thus, retailers employ people with expertise and interest in
finance, accounting, human resource management,
logistics and computer system as well as marketing.
 Entrepreneurial Opportunities
◦ Retailing also provides opportunities
for people who wish to start their
own business.
◦ Some of the world’s richest people
are retailing entrepreneurs.
◦ Many are well known because their
names appear over the stores’ door.
There is no universally accepted method of classifying retailer.
Various schemes have been proposed to categories retailers
based on
 Number of outlets
 Margin vs. turnover
 Location
 Size.
Because of overlap of classification criteria, some stores may
qualify as under two different categories.

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1. General merchandise retailer: general merchandise
retailer carry a variety of product lines, with considerable
depth. Some major types of these stores include
supermarkets and hypermarkets , discount stores and
department stores.

o Super market: A supermarket is a large self service retail

store that carries a wide variety of consumer products under
one roof , such as complete line of food products , laundry
requirement, household maintenance items. In India
cooperative have managed some supermarkets for quite
sometime like super bazaar in Delhi, apna bazaar shakari
bhandar etc.

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o Discount store: these stores are self service, standard
general merchandise retailers regularly offering brand name
and private brand items at low price, earn lower margins and
push for high sales turnover. The characteristics of true
discount stores include
 Selling products at discounted price
 Carry standard international , national, or store brand toi
build image
 Self service stores to minimize operational costs
 Preferred store location are low rent areas.
Like best known discount store is Wal-Mart. In India almost all
retail stores offer discounts, subhiksha

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o Department store: a department store is larger retail store
organized into several departments, offering a broad verity and
depth of product lines. The product mix may include food
products, appliances, clothing, furnishing and other household
goods.
 Like Pantaloons, shoppers’ stop,
 department store only for kids is Kids Kemp.
 Fashion related department stores in India are Ebony, Globus,
pantaloons, lifestyles.

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2. Specialty Stores: specialty stores carry a narrow product
mix with depth of assortment within the line.
 The emphasis is on a limited number of complimentary
products and high level of customer service
 Specialty store often sell shopping goods such as Jewelry,
apparel, computers, music systems, sporting goods.
 Like; Tanishq, Titan watches, Van Heusen, Raymond's.

3. Shopping Malls: shopping malls typically deal with several

bases and product categories and provide a large variety of
merchandise abs service. There are 96 operational malls in
India and expected to grow 158 by this current year.
 Ansal plaza (Delhi), Garuda mall (Bangalore) Sahara plaza
Gurgaon Spenser Plaza Chennai

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4. Retail chains: a retail chain operates multiple retail outlets
under common ownership in different cities and towns.

 To some extent the purchasing function and decision making

are coordinated or centralized.
 Like Westside, Globus, Food world, McDonald's retail petrol
outlets. Etc.

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 Retail is the new buzzword in India.

 The global Retail development Index has ranked India first,

among the top 30 emerging markets in the world.

 It is believed that India has the potential to deliver the fastest

growth over the next 50 years.

 While barter would be considered to be oldest form of retail

trade, since independence , retail in India has evolved to
support the unique needs of country, given its size and
complexity

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 Second largest sector after Agriculture. Contributes about 10 –
11 % of the GDP

 The estimated size of the organized retail industry in India is

Rs. 16,000 crores. This is 2 % of the total estimated retail
trade.
 Indian Retail trade increased from Rs. 2200 billion in 2000 to
Rs 3300 billion by the year 2005

 India's first true shopping mall – complete with food courts,

recreation facilities and large car parking space – was
inaugurated as lately as in 1999 in Mumbai. (this mall is called
"Crossroads").

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 Retail in India has evolved to support the unique needs of our
country, given its size and complexity Haats, Mandis and Melas have
always been a part of the Indian landscape. They still continue to
be present in most parts of the country and form an essential part
of life and trade in Various areas.

 The PDS (Public Distribution System) would easily as the

single largest retail chain existing in the country. the evolution of
the PDS of Grains in India has its origin in the “rationing
system” introduced by the British during world war II

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 The system was started in 1939 in Bombay and subsequently
extended to other cities and towns. the system was abolished
post war but however attaining independence India was forced
to reintroduce it in 1950.

 There was rapid increase in the ration shops ( being

increasingly called the Fair Price Shop or FPSs)

 The Canteen Stores Department and the Post Offices

in India are also among the largest network of outlets in the
country reaching population across the country.

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 The Khadi & Village industries (KVIC) was also set up post
independence. The cooperative movement was again championed by the
government.

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 In the past decade, the Indian marketplace has transformed
dramatically. However from the 1950,s to the 80,s, investment
in various industries was limited due to low purchasing power
in the hands of the consumer and the government’s policies
favoring the small scale sector.

 The first attempts at organized retailing were noticed in the

textiles sector. One of the pioneers in this field was Raymond’s
which set up stores to retail fabric.

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 Raymond’s distribution network today comprises 20,000
retailers and over 256 exclusive showrooms in over 120 cities
of the country

 Other textile manufacturing who set up their own retail chains

wee Reliance- which set up Vimal showrooms and Garden Silk
Mills, which set up Garden Vareli showrooms.

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 Established Emerging
Traditional formats Formats
Formats Kirana shops Exclusive retail outlets
Itinerant Salesman Convenience/ Hypermarket
Haats department stores Internal retail
Melas PDS/ Malls / Specialty Malls
Mandis etc. fair price shops Multiplexes
Pan/ Beedi shops Fast food outlets
Service galleries

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 Evolution of Indian Retail
Environment
Modern Formats/
International

Traditional/Pervasive Government Supported

Reach
Historic/Rural Reach

Exclusive Brand
Outlets
Hyper/Super
Markets
PDS Outlets
Department Stores
Khadi Stores
Convenience Stores Shopping Malls
Cooperatives
Weekly Markets
Village Fairs Shopping
Availability/ Low
Melas Neighborhood Experience/Efficiency
Costs / Distribution
Stores/Convenience
Source of Entertainment
major drivers :
1. Changing Income Profiles: Steady economic growth fuelled
the increase in disposable income in India. The average
middle class family's disposable income rose by more than
20% between 1999-2003.
2. Diminishing difference between Rural and urban India: Rural
India accounts for over 75% of India population and this in
itself offers a tremendous opportunity for generating volume
driven growth. Tax benefit. In year 2002-03 LIC sold 50% of
its policies in rural India. Same BSNL also sold its 50%
connection in small towns .

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3. Changes in Consumption patterns: Occupational changes and
expansion of media have caused a significant change in the
way the consumer lives and spends his money.
o The changes in income brought about changes in the
aspirations and the spending patterns of the consumers. the
buying basket of the consumer changed
4. The emergence of a young Earning India : Nearly 70% of the
Indian population is below the age of 34. taking advantages of
employment opportunity in the booming service sector these
young Indians are redefining service and consumption patterns

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1. Clothing, textiles and fashion Accessories:
2. Food & food Services:
3. Consumer Durables:
4. Books & Music:
Other emerging sectors
5. Jewellery retail
6. Footwear retail
7. Time Wear Retail
8. Fuel Retail/ petro retail

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 Recent Trends Retailing in India is witnessing a
huge revamping exercise as can be seen in the
graph India is rated the fifth most attractive
emerging retail market: a potential goldmine.
 Estimated to be US $200 billion, of which
organized retailing (i.e. modern trade) makes up
3 percent or US$ 6.4 billion.
 The annual growth of department stores is
estimated at 24%.
 Ranked second in a Global Retail Development
Index of 30 developing countries.
Government not to relax FDI policy in retail
 The government is unlikely to take a more
liberal stance on foreign direct investment
(FDI) in the retail sector, something being
favoured by most in the industry.

 The state minister for trade and industry

Jyotiraditya Scindia said in Parliament that
government was not looking to change the
FDI norms in retail for now.
 Presently India allows 51% FDI in single
brand stores.
 It also allows 100% in wholesale cash and
carry model, but has kept out FDI in multi-
brand retail owing to political opposition as
also that from mom and pop store
operators.
 There is no consensus on the issue and a
recent parliamentary standing committee
report strongly opposed FDI in retail citing
its ill effects on domestic businesses.
 Retail industry however has been
demanding allowing FDI into the
multi-brand segment for sometime
now.
 The government, however, maintains
that big multinationals if allowed into
the multi-brand segment, may pose
substantial threat to domestic
retailers, something that the
government is not willing to concede.