RETAILING

Retailing
 Retailing is the set of business activities that adds value to the products and services sold to consumers for their personal or family use  Retailing can be defined as a set of marketing activities designed to provide satisfaction to the end consumer and profitably maintain the customer base by continuous quality improvements across all areas of selling goods and services  -

Retailing involves Understanding the needs of consumers Developing good assortment of merchandise Display of merchandise in effective manner so that consumers find it easy and attractive to buy

Impacting Factors-Indian Retail

Rapid change in Indian consumer profile.Richer, Younger and more aspirations Consumer look forward Value for Money Emergence of New, innovative retail formats Modern organized Retail in Metros, A and few B grade cities Huge investment by Corporate Players like Future Group, Tatas, Reliance, Birlas, RPG

Indian Retail- Drivers for Growth

Spending Pattern Consumer spending is on the rise

- Rise in market opportunity in the region of 15000 Crore among A,B cities Customers Expectation Value expectations -dramatic changes Consumer Lifestyle Two income households with higher disposable incomes Changing Attitudes Indian consumers are now global in their consumption patterns - Indian young executives, Youth (BPO ,Part Time -Extra earnings),Teenager Cool Attitude Increased Spending by Rural consumers

Indian Retail- Drivers for Growth

Economic Growth The gradual increase in GDP and purchasing power of

Indians provide excellent opportunity for organized retailer Urbanization- The share of urban population in class I cities (Population above 1 lakh)increased from 26% to 65% from 1981 to 2001. -The rising concentration of urban population with higher purchasing power Consumerism- Changing lifestyle influenced spending on goods like cars, consumer durables, mobiles, designer dresses, cosmetics and luxury gadgets etc Brand Profusion Increased brand consciousness-Multifold increase in number of brands in almost every product range

Comparative Penetration of Organized Retail

120 100 80 60 40 20 0 85 81 55 40 30 20 15 19 45 60 70 80

97

Organized

Traditional

Column1

Source -Ernst & Young,India Great Retail Story 2006

Total Retail Sales Pie-2005

Health & Beauty 2% Home Fur ishi g 2% Jewellary & Accessories 4% Durables 4% Medical Services 2% Footware 1%

Sales
Books & Music 1%

lothi g 7%

Food & Grocery 77%

Source-E & Y -Great India Retail Story,2006

Retailers Role-in Distribution Channel

Retailer last entity in distribution channel. Plays the role of intermediary
Gather Information-Potential & current customers, competitors & other forces Develop & Disseminate - persuasive Communication Place Provide -Orders with manufacturers -successive storage & movement of physical goods Negotiation- Final agreement on price & other terms Risk taking assumption of risk taking Title Actual transfer of ownership from one organization to other

rs

Benefits of Retailing -Benefits to customers

Breaking bulk - Buy in bulk from manufacturers and divide in to smaller parts according to consumption pattern Providing assortment Evaluate t e products off various manufacturers and offer t e best collection of products Holding inventory T ey carry inventory and make t e products available to consumers at a convenient place and time Providing After Sales & Service Proving Information

Retailing -Benefits to Manufacturers & Distributors

Benefits to Economy
The retailing business largest private sector in world with turnover of US $ 6.6 trillion plus

Retailing constitute a tenth of the fortune 500 companies

In India,Retail accounts for more than 10% of GDP and around 8% of employment

Retailing Environment

Economic Environment Some of the economic factors that affect retailers

are GDP, Rate of inflation, Purchasing Power, Interest rates etc Legal Environment-Few legal aspects faced by Retailers in India -FDI Restrictions- GOI planning to increase FDI in retail sector.Opening in FDI would - Bring in valuable foreign exchange - Provide Huge employment opportunity - Improve shopping experience -Wider choice of Products at competitive rates

Legal Environment

Property Regulations Hurdles such as sky rocketing rental & lease amounts
as well as good retail space at prime locations - High retail space prices,hefty stamp duty for property transfer,Urban ceiling act Real Estate Mismatch between Demand & Supply.Lease rates PSFPM that is Per Square Foot per Month very high Variation in Sales tax across States was another problem.Eased due to VAT in many states Labor Laws Stringent Indian laws Another concern

Retailing Environment
Technological Environment

Key driver of Change.IT provides competitive advantage IT majors like SAP,CISCO,IBM Retail IT solution providers. Others include Ginesys, Gunnebo,Check point systems and many more Retail IT solution areas - Store integration framework -Integrated multi-channel retail solution -Digital video survelliance -Store traffic system (includes foot fall measurement) -POS,ERP,CRM,SCM

Retailing Environment
Competitive Environment Retailing in India Nascent stage Still severe competition between existing players Huge untapped potential Encouraging many new players Current recessionary trend Bit slowdown on newcomers as well as major expansion plans of existing players on hold Reforms on retail sector Entry of Retail Giants like WalMart, Tesco, Carrefour, J C Penny Competitive game plans - Mergers, Acquisition,JV,Consolidation