Retail Management

Reaching the destination

Module 1

Evolution of Indian retailing

Increasing per capita income, growing GDP, Consumer finance

Satellite televisions, urban life style trends
Weekly bazars, rural fairs
Khadi & Village industries Commission 1956
1980s S.Kumars, Bombay Dyeing, Raymonds
1995 malls in Metros (Spencers started to be built in 1863
and restructured in 1985)
3 Vs variety, value and volume
Indian retail 10% of GDP (2016 - ibef)
US$ 1 trillion by 2020 (E)

Benefits of retail to customers

1. Breaking bulk - smaller sellable units, quantity discounts
from manufacturers, lower freight rates for large shipment
2. Providing assortment- the best collection, variety in
assortment
3. Holding inventory - instant purchases
4. Providing services- value added services (providing free
home delivery, accepting credit cards, accepting payments
on installment basis, arranging loans)
5. Providing information - product related information to
their consumers, feedback to the manufacturers

Benefits of retail to manufacturers and

wholesalers

greater revenues
valuable insights about the
customer
help make modifications to the
existing products or launch new
products

Retailing environment
1. Economic
environment:
A
T
Kearney,
a US Based global
management consulting firm - ranked
India - fourth most attractive nation for
retail investment among 30 flourishing
markets Rs.23 lakh crore in 2011-2012
(7% organized)
projected organized
retail CAGR 24% to
reach 10.2% by 2016-17
* New dimensions in retail sector with changing times in
India - article

Retailing environment
2. Legal environment:
Foreign Investment Promotion Board (FIPB)
2012 51% FDI into the multi brand retailing
2016 100% - in food products as long as
they are sourced and manufactured within
India - BJP govt
2012 IKEA not allowed to open cafes
and food markets, famous for selling
products -meatballs and Lingonberry
jams in its stores.

Retailing environment
3. Technological environment:
inventory management, billing,
database management, bar code
scanners, point-of-sale terminals,
management information systems,
pleasant shopping experience

Retailing environment
4. Competitive environment: Between
unorganized and organized formats,
among organized retailers
New-comers into the Indian retailing (ibef)
New York-based designer brand Kate Spade
Neil Barrett, one of the leading Italian fashion brands
Abu Dhabi-based Lulu Group plans to invest Rs 2,500
crore (US$ 370.6 million) in a fruit and vegetable
processing unit

Key drivers of the Indian Retail Industry

Emergence of nuclear families
An increase in the double-income
households trend
Large working population
Demand as well as increase in
expenditure for luxury items
Growing preference for branded
products and higher aspirations
Growing liberalization of the FDI policy
in the past decade

Issues in Indian retail

sector
long way to meet international
standards
Lack of efficient supply-chain
management
Lack of required retail space
No fixed consumption pattern
Shortage of trained manpower
Lack of proper infrastructure and
distribution channel

Theories of institutional
change
1.

Theories of institutional
change
2. Retail Accordion
theory:
phase 1 stores with
wide merchandise
Phase 2 specialize
in a few
Phase 3 back to
wide choices to
compete

Theories of institutional
change
3. Dialectic Process: two
institutional forms with
different advantages modify
their formats till they
develop a format that
combines the advantages
of both.
Thesis - beginning
proposition
Antithesis - negation of
that thesis
Synthesis - reconciled to
form a new proposition

Theories of institutional
change
4. Theory of natural selection :
adapt to the changing environment,
change its product line, price, location
and promotional strategies according
to changes taking place in the retail
environment

Store based
A) Ownership based
1) Independent retailer (free to take decisions any kirana
store owner)
2) Chain store (centrally managed, cost effective,
geographically dispersed eg.Ratnadeep)
3) Franchising(product or TM Archies Gallery, business
format Dominos, Area development franchising
publishing houses in developing areas)
4) Leased departments (shop-in-shop, for another brand on
monthly basis Higginbothams at railway stn., chain of
restaurants and Major bakers in Malls)
5) Vertical marketing systems (similar roles and opportunities
for all middlemen to make profits)
6) Consumer co-operatives ( run by local residents apna
bazars in Mumbai)

Store based - B) Merchandise based

a) Food
1) Convenience store - smallgrocery
store, or corner shop
2) Conventional supermarket - a
departmentalized food store with a wide
range of food and related products,
merchandise of any kind
3) Food based supermarket staples, dairy
4) Combination store of any of these

Store based - B) Merchandise based

b) General merchandise
1) Discount stores
2) Specialty stores
3) Factory outlet stores
4) Hyper markets
5) Departmental stores
6) Membership clubs
7) Parasite stores
8) Destination store

Discount stores
1) Limited line discount stores
limited lines of products at low
prices but the brands are reputed
(Brand factory)

Discount stores
2) Full line discount stores broad
merchandise assortment in high
volume but at low cost. Housewares,
kitchenwares, sports accessories,
auto spares etc. Big Bazaar

Discount stores
3) off-price store buy merchandise
from wholesalers at less than regular
wholesale prices, leftover
merchandise, irregular assortment.
Pantaloon factory outlets, Levis
factory outlets and Liberty factory
outlets

Specialty stores
Narrow product line with deep
assortment
Clearly defined target market
Exceptional customer service
Generally competitive pricing
strategy

Factory outlets
Owned and managed by
a retail firm
Defected items, Outdated
stuff, Cancelled orders
Open all seven days a
week
Long working hours
Limited customer service
Less marketing efforts
Out of the way location

Hypermarket
Large sized stores in
India a minimum of 50,000
sq.ft, self service
Ample car parking space
Long range of merchandise
1000 100000
Employees 100 1000
Pricing generally
discounted
Generally 20 60 cash
counters

Departmental stores
Large variety and deep
assortment
Separate depts.
Each dept. sells unique
products, has accounts,
packaging and security
staff
Mostly FMCG
Balance between furniture,
consumer electronics,
apparels and food

Mukesh
Ambani

Membership club retailing

Fixed quantities at low
prices
Membership to be
taken
Food, grocery, clothing
and consumer
electronic goodsCustomer service low
due Club,
to low
price
policy
Sams
which
is owned
byWal-MartStores
Inc.,isallowingfamilies and
small businesses tobuy a 15-

Parasite store
Small in size
Neither own place nor
customer traffic
Depend on the visitors
of that location for
other purposes
Coffee parlor in a
shopping mall, beauty
parlor in a PVR
Cinema complex

Destination store
Customers make
special visit for the
purpose of shopping
Unique in assortment
Way of presentation
Ambience
Pricing
Customer service

Non-store
based
a) Traditional
1) Direct marketing
2) Direct selling
3) Vending machine
4) Catalogue marketing
5) Telemarketing
6) TV Home shopping

Non-store based
b) Non-traditional
1) Electronic
shopping
2) Video kiosks
3) Airport retailing

Video kiosks
Self supporting,
interactive, electronic
computing terminal
Displays goods and
services
Touch screens for
product details user
friendly
Enhances customer
service
Useful when there is
shortage of space

Types of video kiosks

Ticketing kiosks
Vending kiosks
Instant print
stations
Digital menu
boards
Way finding kiosks
Digital order
stations

Airport
retailing
Heathrow
(London)

Low cost carriers

Airports now lively
destinations
Branded luggage,
clothing, food, toys,
electronics, souvenirs,
wrist watches etc.
Shoppers stop, Future
group, Croma

Zurich
(Swiss)