RETAILING

BY,
S.ARIVUTHIRA
KARUPPIAH

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 RETAIL:

The word RETAIL is in fact derived from

the french word RETAILLIER which means to
cut off a piece (or) to break bulk.

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 RETAILING:

Retailing can hence be considered as the

last stage in the movement of goods (or)
services to the consumer. Put simply any
firm that sells products to the final consumer
is performing the function of retailing. It thus
consist of all activities involved in the
marketing of goods and services directly to
the consumers for their personal, family (or)
household use.

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 WHO is a RETAILER:

A retailer may be defined as a DEALER (or)

TRADER who sells goods in small quantities
(or) one who repeats (or) relates.
An organization , dealer (or) trader that
purchases products for the purpose of
retailing (or) reselling them to ultimate
consumers.

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 RETAILING vs WHOLESALING:

 Retailingis arrived at the actual (or) ultimate

consumers.
 Retailing involves selling for personal
consumption

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 CLASSIFICATION OF RETAIL STORES:

 Speciality store.
 Department store.
 Super markets.
 Convenience stores.
 Discount stores.
 Off price retailers.
 catalogue show rooms.

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 CLASSIFICATION OF RETAIL STORE:
 Malls:  Department Stores:
The largest form of organized retailing today. Located mainly in Departmental Stores are expected to take over the apparel business
metro cities, in proximity to urban outskirts. Ranges from 60,000 sq ft from exclusive brand showrooms. Among these, the biggest success
to 7,00,000 sq ft and above. They lend an ideal shopping experience is K Raheja's Shoppers Stop, which started in Mumbai and now has
with an amalgamation of product, service and entertainment, all more than seven large stores (over 30,000 sq. ft) across India and
under a common roof.Examples include Shoppers Stop, Piramyd, even has its own in store brand for clothes called Stop!.
Pantaloon.

 Specialty Stores:  Hypermarts/Supermarkets:

Chains such as the Bangalore based Kids Kemp, the Mumbai books Large self service outlets, catering to varied shopper needs are
retailer Crossword, RPG's Music World and the Times Group's music termed as Supermarkets. These are located in or near residential
high streets. These stores today contribute to 30% of all food &
chain Planet M, are focusing on specific market segments and have grocery organized retail sales. Super Markets can further be
established themselves strongly in their sectors. classified in to mini supermarkets typically 1,000 sq ft to 2,000 sq ft
and large supermarkets ranging from of 3,500 sq ft to 5,000 sq ft.
having a strong focus on food & grocery and personal sales.

 Discount Stores:  Convenience Stores:

As the name suggests, discount stores or factory outlets, offer These are relatively small stores 400-2,000 sq. feet located near
discounts on the MRP through selling in bulk reaching economies of residential areas. They stock a limited range of high-turnover
convenience products and are usually open for extended periods
scale or excess stock left over at the season. The product category during the day, seven days a week. Prices are slightly higher due to
can range from a variety of perishable/ non perishable goods the convenience premium.

 Department Stores:  MBO’s :

Large stores ranging from 20000-50000 sq. ft, catering to a variety of Multi Brand outlets, also known as Category Killers, offer several
consumer needs. Further classified into localized departments such brands across a single product
as clothing, toys, home, groceries, etc.
category. These usually do well in busy market places and Metros.

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 RETAILING SCENARIO

GLOBAL PERSPECTIVE.
INDIAN PERSPECTIVE.

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 GLOBAL PERSPECTIVE:

Retail is a significant contribution to the over

all economic activity. The world over the
total share in the world GDP is 27%, while in
the U.S.A for 22% of the GDP.
According to the U.S. Dept. of labour, about
22 million AMERICANS are employed in the
retailing industry in more than 2MILLION
retail stores .”that is one out of every 5
workers employed”.

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 TOP5 RETAIL STORES IN WORLD:

 1.WAL MART u.s.a 1383000 employees.

 2.TESCO u.k 171794 employees.
 3.CARREFOUR france 382821 employees.
 4.HOMEDEPOT u.s.a 256300 employees.
 5.KROGER u.s.a 288000 employees.

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 INDIAN RETAIL SECTOR:

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 Industry Evolution
 Traditionally retailing in India can be traced to
– The emergence of the neighborhood ‘Kirana’ stores catering to the convenience of the
consumers
– Era of government support for rural retail: Indigenous franchise model of store
chains run by Khadi & Village Industries Commission
 1980s experienced slow change as India began to open up economy.
 Textiles sector with companies like Bombay Dyeing, Raymond's, S Kumar's and
Grasim first saw the emergence of retail chains
 Later Titan successfully created an organized retailing concept and established a
series of showrooms for its premium watches
 The latter half of the 1990s saw a fresh wave of entrants with a shift from
Manufactures to Pure Retailers.
 For e.g. Food World, Subhiksha and Nilgiris in food and FMCG; Planet M and Music
World in music; Crossword and Fountainhead in books.
 Post 1995 onwards saw an emergence of shopping centers,
– mainly in urban areas, with facilities like car parking
– targeted to provide a complete destination experience for all segments of
society
 Emergence of hyper and super markets trying to provide customer with 3 V’s - Value,
Variety and Volume
 Expanding target consumer segment: The Sachet revolution - example of reaching to
the bottom of the pyramid.
 At year end of 2000 the size of the Indian organized retail industry is estimated at Rs.
13,000 crore
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 FACTS ABOUT RETAIL IN INDIA:

* India is 2nd fastest growing economy in the

world.
* More English speaking people.
* 2nd most attracting developing market,
head of china.
* AT Kearney has estimated India's total
retail market at US $ 202.6 billion which
is expected to grow at a compounded
30% over the next five years.

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 TOP 10 RETAIL PLAYERS IN INDIA:

 Shoppers' Stop (k.raheja)1991.

 Westside (Trent) (tata)1998.
 Pantaloon (Big Bazaar) (future group)1997.
 Lifestyle (land mark group)
 RPG Retail (Foodworld, Musicworld) (rpg enterprises)
 Crossword (shopper’sstop)1992.
 Wills Lifestyle (itc)
 Globus (rajan raheja group)1998.
 Piramals ( Pyramid & Crosswords) 1999.
 Ebony Retail Holdings Ltd. 1994.

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 Retailing formats in India
India’s number of Domestic grocery chains and Early Foreign Entrants

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 Recent Trends
Retail Sales in India

 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
 As per a report by KPMG the annual
growth of department stores is
estimated at 24%
 Ranked second in a Global Retail
Development Index of 30 developing
countries drawn up by AT Kearney.

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 Major Retailers
Leading Retailers

 India’s top retailers are largely

lifestyle, clothing and apparel
stores
 This is followed by grocery
stores
 Following the past trends and
business models in the west
retail giants such as
Pantaloon, Shoppers’ Stop
and Lifestyle are likely to
target metros and small cities
almost doubling their current
number of stores
 These Walmart wannabes
have the economy of scale to
be low –medium cost retailers
pocketing narrow margin

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 IMPACT OF MNC’S ENTER INTO
RETAIL MARKET IN INDIA:

 FAVOURABLE IMPACTS:
The job opportunities are high in retail
industry.
The customers enjoy and experience the
shopping.
The good quality products with lower
cost because of no intermediaries.

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  UNFAVOURABLEs:

The local vendors (or) street vendors

are very much affected.

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 CHALLENGES:

The competition from the unorganized sector is

formidable.
Change in consumer behavior, intensification of
competion with the emergence of new players &
rapid technological advances have made it difficult to
achieve success in the retail industry.
Unorganized retails enjoy higher margin due to low
operational cost, Taxations, logistics, lack of trained
workforce,etc.,

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 India vs. World
 Indian retail is fragmented with over 12 million outlets operating in the country. This is in comparison to
0.9 million outlets in USA, catering to more than 13 times of the total retail market size as compared to
India
 India has the highest number of outlets per capita in the world - widely spread retail network but with the
lowest per capita retail space (@ 2 sq. ft. per person)
 Annual turnover of Wal-Mart (Sales in 2001 were $219 billion) is higher than the size of Indian retail
industry. Almost 100 times more than the turnover of HLL (India's largest FMCG company).
 Wal-Mart - over 4,800 stores (over 47 million square meters) where as none of India's large format store
(Shoppers' Stop, Westside, Lifestyle) can compare.
 The sales per hour of $22 million are incomparable to any retailer in the world. Number of employees in
Wal-Mart are about 1.3 million where as the entire Indian retail industry employs about three million
people.
 One-day sales record at Wal-Mart (11/23/01) $1.25 billion - roughly two third of HLL's annual turnover.
 Developed economies like the U.S. employ between 10 and 11 percent of their workforce in retailing
(against 7 percent employed in India today).
 60% of retailers in India feel that the multiple format approach will be successful here whereas in US 34 of
the fastest-growing 50 retailers have just one format
 Inventory turns ratio: measures efficiency of operations. The U.S. retail sector has an average inventory
turns ratio of about 18. Many Indian retailers KPMG surveyed have inventory turns levels between 4 and
10.
 Global best-practice retailers can achieve more than 95 percent availability of all SKUs on the retail
shelves (translating into a stock-out level of less than 5 %).The stock-out levels among Indian retailers
surveyed ranged from 5 to 15 percent.

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 Future direction: Positives

 AT Kearney has estimated India’s total retail market at US$ 202.6 billion which is expected to
grow at a compounded 30 per cent over the next five years.
 With the organised retail segment growing at the rate of 25-30 per cent per annum, revenues
from the sector are expected to triple from the current US$ 7.7 billion to US$ 24 billion by 2010.
 The share of modern retail is likely to grow from its current 2 per cent to 15-20 percent over the
next decade
 Over next two years India will see several Indian retail businesses attaining a critical mass as
growth in the industry picks up momentum driven by two key factors:
– Availability of quality real estate and mall management practices
– Consumer preference for shopping in new environments
 Wal-Mart : huge plans for India. Moving a senior official from its headquarters in Bentonville,
Arkansas, to head its market research and business development functions pertaining to its
retail plans in India.
 New York-based high-end fashion retailer Saks Fifth Avenue has tied up with realty major DLF
Properties to set up shop in a mall in New Delhi.
 Tommy Hilfiger, retailer of apparels, expects to open one store each in Delhi, Ahmedabad,
Lucknow and Bangalore in the next four months.

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 Future direction: Concerns

 68 million square feet of mall space is expected to be available by end of 2007, which might lead
to over-capacity of malls
 Lack of differentiation among the malls that are coming up. One option may be to look at
specialization.
 Poor inventory turns and stock availability measures - retailers clearly need to augment their
operations.
 Operations of retailers and suppliers are not integrated. Efficient replenishment practices practiced
in the Indian auto and auto-component industry can be leveraged to implement efficient supply
chain management techniques.
 Supplier maturity, in terms of adherence to delivery schedules and delivering the quantity ordered,
is an issue
 Sales tax laws - lead to retailers having state-level procurement and storage leads to Indian
retailers having higher inventories. VAT has helped alleviate this a bit.
 Increased adoption of IT and shrinkage management will be a critical area.
 Supply chain and customer relations followed by merchandising, facilities management and
vendor development are areas which have significant gaps and proactive training is a key
imperative for overcoming these.

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