Retail Marketing

Introduction

Prof.P.C.Mehra
 Retail Marketing Management
Retailing – Consists of those business
activities involved in the sale of goods &
services to consumers for their personal,
family or household use – the final stage
in the distribution process.
The word ‘retail’ is derived from a French
word retaillier, meaning “to cut a piece
off” or “break bulk”
. Retail Marketing Management

Manufacturer

Wholesaler

Retailer

Consumers
 Importance of Retailing
 The final link with consumer for selling & feedback

 Impact on the economy

 Accessibility in various locations

 Avenue to study consumer preferences & buying habits

 Avenue for imaginative merchandising

 Buying thru touch, feel & comparison without dealer

influence

 Buys in bulk, sells in smalls

 Induces impulse purchase

 Retailing in India

 India is the 4th largest economy in the world in Purchasing Power Parity terms after USA,
China & Japan.

 According to one estimate the retailing industry in India is estimated at USD 205b
(Rs.230,000 Crore) growing at 5% p.a. Worldwide retail sales are estimated at $7 trillion

 If it maintains a growth rate of 10% it will be worth $300 b with 1 m jobs & 10 m Sq.ft. of
constructed space in the next 10 years

 According to ATKearney, in 2000 the Retailing industry was estimated to be Rs.400,000

crore and set to achieve Rs.800,000 crore by 2005 at a growth rate of 20% p.a

 Organized Retail was worth only about Rs.20,000 crore (2000) and expected to grow to
Rs.160,000 crore by 2005.

 96% of the retail outlets are said to be smaller than 500 sq ft in area amounting to
approx 2 sq ft per capita when compared to 16 sq ft in the US.

 According to a McKinsey report – by 2005, India will see 25 warehouse clubs & 33
super centres leading to $ 2.5 b direct investment.
 Some Statistics

 An average retail mall is 1 – 1.5 lac sq.ft

 Average investment per mall Rs.30 cr

 Average rate of return @ 18-20%

 Cities other than Bombay / Delhi are far more attractive for
retail malls growth
 Organized Retailing in India

Present
 12 m retail outlets in the country (Mexico has 1.18m)
 Density of outlets 5.5/1000 persons
 Bata – India’s largest retail chain has a combined T/o of $ 140 m,
whereas Walmart has $180m from one store
 Ratio of land space cost to GDP in India is the highest in the world:
Mumbai 115
Bangalore 52
Singapore 12
Tokyo 9
Sydney 6
Kaula Lumpur 2

 Organized retail industry in India is only 2% as against 50% in Malaysia.

 Organized Retailing in India
The mall mania

 93 malls are planned in the next 2 years across 14* cities all India, 39 in
2005 and 54 in 2006 with additional 29m sq ft retail space
 By 2010, 300 malls are expected to become operational in the country.
 NCR to boast of 50 malls in the next 2 years with retail space in excess of
22m sq ft.
 Mumbai will have 42 malls with retail space of 19m sq ft
 Bangalore will have 14 malls with 6m sq ft
 Kolkatta will have 13 malls with retail space of 4m sq ft.

 *14 cities…..NCR, Mumbai, Bangalore, Hyd, Kolk, Pune, Lucknow,

Indore, Jpr, Ludh, Cochin, Chand, Chennai, Ahmd,
 The Organized Retailing Pie

Books, music &

Jewellery & gifts Mobile handsets
watches 3% 3%
7%
Others
Catering
4%
services
7%

Furniture &
furnishings
8%

Footwear
9%
Clothing & textile
39%

Consumer
durables Food & grocery
9% 11%

Source – KSA Technopak Research

 Region-Wise Mall Development - 2005 Region-Wise Mall Development - 2006

East South East

5% 14% 4%
South
22%

North
North 42%
West
44%
40%
West
29%

Source: ICICI Property Services

 Mall Development in India – Top 14 Cities
Number of Malls Area (Million sq ft)

City 2005 2006 TOTA 2005 2006 TOTAL

L

NCR 14 18 32 3.35 6.67 10.03

Mumbai 7 14 21 2.45 4.60 7.05

Bangalore 5 1 6 1.06 0.50 1.56

Hyderabad 3 4 7 0.74 0.65 1.39

Kolkata 2 1 3 0.45 0.70 1.15

Pune 2 6 8 0.41 2.20 2.61

Lucknow 2 1 3 0.34 0.40 0.74

Indore 1 - 1 0.30 - 0.30

Jaipur 1 1 2 0.20 0.25 0.45

Ludhiana 1 1 2 0.20 0.20 0.40

Cochin - 2 2 - 0.85 0.85

Chandigarh - 2 2 - 0.40 0.40

Chennai 1 2 3 0.40 0.65 1.05

Ahemadabad - 1 1 - 0.65 0.65

TOTAL 39 54 93 9.90 18.72 28.62

Source – ICICI Property Services Research

Inorbit mall & Phoenix High Street
Mumbai

Source: ICICI Property Services

 Mixing Retail, Leisure & Pleasure
NCR experience

• The NCR is set to witness the Mother of all Malls in the Vasant
Kunj….DLF Place with 850,000 sq ft area.
• Consist of twin properties…The Promenade & The Emporia
providing holistic family entertainment and shopping.
• Will house the largest multiplex (74,000 sq ft) and food court
(65,000 sq ft) with parking for 2700 cars.
• Promises to bring together International brands and offer an
International shopping experience.
• Land sold by DDA for Rs.409 Crore, along with another piece of
land for Rs.330 crore for another mall.
 West Edmonton Mall, Canada

Listed in the Guinness Book for the largest shopping

centre in the world & world’s largest parking lot.
Source: ICICI Property Services
Phases of Mall development

Infancy Development Maturity Decline

Bangladesh, South East Asia,

Sri Lanka Middle East

China, India USA, UK

Phase I Phase II Phase III Phase IV

Source: ICICI Property Services

 Asian Comparisons

 India is among the last Asian economy to liberalize the retail

sector

 Thailand, Malaysia, Taiwan – 40% of all consumer goods are

sold through organized retailers

 In China more than a 10th of all consumer goods are sold

through modern retail formats.

 FDI is encouraged all over Asia.

 Organised Retailing in South Asian
Countries
Organized. Ret Traditional Ret.
• Malaysia 50% 50%
• Thailand 40% 60%
• Philippines 35% 65%
• Indonesia 25% 75%
• China 20% 80%
• S.Korea 15% 85%
• India 02% 98%
 What Ails India

 No policy concerning retail sector, no political consensus

 FDI not permitted, expected to open up selectively

 Red tape – 12/15 clearances & the license RAJ still prevail

 Land ownership laws have made real estate prohibitive,

not scarcity of space.

 Future growth is technology driven & India is far behind on

logistics & supply chain (it has taken McDonald’s 5 years to
established acceptable levels of arrangements)
 Commercial property rentals
an overview
• London’s West End, most expensive destination
globally (rentals $ 179/sq ft)
• Tokyo Inner CBD (rentals $131/sq ft) ranks 2
• Tokyo Outer CBD (rentals $123/ sq ft) ranks 3
• Mumbai (rentals $57/ sq ft) global rank 23
• Midtown Manhattan (rentals $53.70) ranks 27
• Delhi (rentals $43/ sq ft) global rank 33

• 10 years ago Mumbai was No:1

 Khul ja Sim Sim !!!

• Starbucks eyes partner for India

• Debenhams plans stores in Delhi, Gurgaon
• McDonald’s to set up 100 restaurants in 2 years
• Pantaloon to set up flagship store for home
management products
• Tiffany, Louis Vitton, Hermes Saks 5th Avenue line up
for India
• GAP, H&M expected to set up shop
• Retail FDI buzz draws Walmart honcho
• M&S, Metro too keen on India