RETAIL MANAGEMENT PART-1

Prepared by : Dr. Pooja Sharma Presented by : Education & Information Network http://www.InfoFanz.com [email protected]

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Introduction to Retail
Unit I
Introduction to Retail: what is Retail, The functions of retail, retailing in India. The evolution of retail in India, retail Change in India
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Introduction:

The word retai has its ori!in in French word retaillier and means to cut a piece or to break bulk. Retailing is the sale of goods and services to the ultimate consumer for personal, family or household use.

According to Kotler: Retailing includes all the activities involved in selling goods or services to the final consumers for personal, non business use

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#etai in! may be $nderstood as the fina step in the distrib$tion of merchandise for cons$mption by the end cons$mers. #etai in! is responsib e for matchin! fina cons$mer demand with s$pp ies of different mar%eters. #etai in! is hi!h intensity competition ind$stry& The reasons for its pop$ arity ie in its abi ity to pro'ide easier access to 'ariety of prod$cts& freedom of choice and many ser'ices to cons$mers. The Indian retai is dotted by traditiona y mar%et p ace ca ed bazaars or haats comprises of n$mero$s sma and ar!e shops& se in! different or simi ar merchandise

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Wheel of Retailing

) better %nown theory of retai in! *wheel of retailing proposed by +ac comb +c,air says&
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,ew retai ers often enter the mar%et p ace with ow prices& mar!ins& and stat$s. The ow prices are $s$a y the res$ t of some inno'ati'e cost-c$ttin! proced$res and soon attract competitors.

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/ith the passa!e of time& these b$sinesses stri'e to broaden their c$stomer base and increase sa es. Their operations and faci ities increase and become more e0pensi'e. Presented by www.InfoFanz.com ( : Preapred By D

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They may mo'e to better $p mar%et ocations& start carryin! hi!her 2$a ity prod$cts or add ser'ices and $ timate y emer!e as a hi!h cost price ser'ice retai er. By this time newer competitors as ow price& ow mar!in& ow stat$s emer!e and these competitors too fo ow the same e'o $tionary process. The whee %eeps on t$rnin! and department stories& s$permar%ets& and mass merchandise went thro$!h this cyc es.

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Functions of a retaillier

From the c$stomer point of 'iew& the retai er ser'es him by pro'idin! the !oods that he needs in the re2$ired assortment& at the re2$ired p ace and time. From an economic standpoint& the ro e of a retai er is to pro'ide rea added 'a $e or $ti ity to the c$stomer. This comes fo$r different perspecti'es

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Form: First is $ti ity re!ardin! the form of a prod$ct that is acceptab e to the c$stomer. The retai er does not s$pp y raw materia & b$t rather offers finished !oods and ser'ices in a form that the c$stomers want. The retai er performs the f$nction of sortin! the !oods and pro'idin! $s with an assortment of prod$ct in 'ario$s cate!ories. Time: 6e cerates Time $ti ity by %eepin! the store open when the cons$mers prefer to shop. preferab e shoppin! ho$rs.

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Place: By bein! a'ai ab e at a con'enient ocation& he creates place $ti ity.

Ownership: Fina y& when the prod$ct is so d& ownership $ti ity is created. )part from these f$nctions retai er a so performs i%e: 5. Arranging Assort ent: man$fact$rers $s$a y ma%e one or a 'ariety of prod$cts and wo$ d i%e to se their entire in'entory to few b$yers to red$ce costs. Fina cons$mers& in contrast prefer a ar!e 'ariety of !oods and ser'ices to choose from and $s$a y b$y them in sma $nits. 8 #etai ers are ab e to ba ance the demands of both sides& by co ectin! an assortment of !oods from different so$rces& b$yin! them in s$fficient y ar!e 2$antities and se in! them to cons$mers in sma $nits Presented by www.InfoFanz.com 17 : Preapred By D
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!rea"ing !ul": to red$ce transportation costs& man$fact$rer and who esa ers typica y ship ar!e cartons of the prod$cts& which are then tai ored by the retai ers into sma er 2$antities to meet indi'id$a cons$mption needs #olding stoc": #etai ers maintain an in'entory that a ows for instant a'ai abi ity of the prod$ct to the cons$mers. It he ps to %eep prices stab e and enab es the man$fact$re to re!$ ate prod$ction. Pro otional support: sma man$fact$rers can $se retai ers to pro'ide assistance with transport& stora!e& ad'ertisin!& and pre- payment of merchandise.

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Ma or t!"e of retail stores There is no $ni'ersa y accepted method of c assifyin! retai er. 9ario$s schemes ha'e been proposed to cate!ories retai ers based on ,$mber of o$t ets +ar!in 's. t$rno'er :ocation Size. Beca$se of o'er ap of c assification criteria& some stores may 2$a ify as $nder two different cate!ories.

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&eneral erchandise retailer: !enera merchandise retai er carry a 'ariety of prod$ct ines& with considerab e depth. Some major types of these stores include supermarkets and hypermarkets , discount stores and department stores. 'uper ar"et: ) s$permar%et is a ar!e se f ser'ice retai store that carries a wide 'ariety of cons$mer prod$cts $nder one roof & s$ch as comp ete ine of food prod$cts & a$ndry re2$irement& ho$seho d maintenance items. In India cooperati'e ha'e mana!ed some s$permar%ets for 2$ite sometime i%e s$per bazaar in De hi& apna bazaar sha%ari bhandar etc.

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(iscount store: these stores are se f ser'ice& standard !enera merchandise retai ers re!$ ar y offerin! brand name and pri'ate brand items at ow price& earn ower mar!ins and p$sh for hi!h sa es t$rno'er. The characteristics of tr$e disco$nt stores inc $de Se in! prod$cts at disco$nted price ;arry standard internationa & nationa & or store brand toi b$i d ima!e Se f ser'ice stores to minimize operationa costs Preferred store ocation are ow rent areas. :i%e best %nown disco$nt store is /a -+art. In India a most a retai stores offer disco$nts& s$bhi%sha
o

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(epart ent store: a department store is ar!er retai store or!anized into se'era departments& offerin! a broad 'erity and depth of prod$ct ines. The prod$ct mi0 may inc $de food prod$cts& app iances& c othin!& f$rnishin! and other ho$seho d !oods. :i%e Panta oons& shoppers< stop& department store on y for %ids is =ids =emp. Fashion re ated department stores in India are >bony& ? ob$s& panta oons& ifesty es.

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'pecialt* 'tores: specia ty stores carry a narrow prod$ct mi0 with depth of assortment within the ine. The emphasis is on a imited n$mber of comp imentary prod$cts and hi!h e'e of c$stomer ser'ice Specia ty store often se shoppin! !oods s$ch as @ewe ry& appare & comp$ters& m$sic systems& sportin! !oods. :i%eA Tanish2& Titan watches& 9an 6e$sen& #aymondBs.

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'hopping ,alls: shoppin! ma s typica y dea with se'era bases and prod$ct cate!ories and pro'ide a ar!e 'ariety of merchandise abs ser'ice. There are 51 operationa ma s in India and e0pected to !row 1(4 by this c$rrent year. )nsa p aza CDe hiD& ?ar$da ma CBan!a oreD Sahara p aza ?$r!aon Spenser P aza ;hennai Presented by www.InfoFanz.com 11 : Preapred By D

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Retail chains: a retai chain operates m$ tip e retai o$t ets $nder common ownership in different cities and towns. To some e0tent the p$rchasin! f$nction and decision ma%in! are coordinated or centra ized. :i%e /estside& ? ob$s& Food wor d& +cDona dBs retai petro o$t ets. >tc.

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The ,ar"eting . Retail /0uation

Manufacturer

Manufacturer

Manufacturer

Wholesaler Retailer Retailer

Feedback

Consumer

Consumer

Consumer

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Retailing in India.

#etai is the new b$zzword in India. The ! oba #etai de'e opment Inde0 has ran%ed India first& amon! the top 37 emer!in! mar%ets in the wor d. It is be ie'ed that India has the potentia to de i'er the fastest !rowth o'er the ne0t (7 years. /hi e barter wo$ d be considered to be o dest form of retai trade& since independence & retai in India has e'o 'ed to s$pport the $ni2$e needs of co$ntry& !i'en its size and comp e0ity

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Second ar!est sector after )!ric$ t$re. ;ontrib$tes abo$t 17 E 11 F of the ?DP The estimated size of the or!anized retai ind$stry in India is #s. 11&777 crores. This is . F of the tota estimated retai trade. Indian #etai trade increased from #s. ..77 bi ion in .777 to #s 3377 bi ion by the year .77( IndiaBs first tr$e shoppin! ma E comp ete with food co$rts& recreation faci ities and ar!e car par%in! space E was ina$!$rated as ate y as in 1555 in +$mbai. Cthis ma is ca ed G;rossroadsGD.

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The /volution of Retail in India

#etai in India has e'o 'ed to s$pport the $ni2$e needs of o$r co$ntry& !i'en its size and comp e0ity Haats, Mandis and Melas ha'e a ways been a part of the Indian andscape. They sti contin$e to be present in most parts of the co$ntry and form an essentia part of ife and trade in 9ario$s areas. The P(' 1Pu2lic (istri2ution '*ste 3 wo$ d easi y as the sin! e ar!est retai chain e0istin! in the co$ntry. the e'o $tion of the PDS of ?rains in India has its ori!in in the rationing system introd$ced by the British d$rin! wor d war II

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The system was started in 1535 in Bombay and s$bse2$ent y e0tended to other cities and towns. the system was abo ished post war b$t howe'er attainin! independence India was forced to reintrod$ce it in 15(7. There was rapid increase in the ration shops C bein! increasin! y ca ed the Fair Price Shop or FPSsD The Canteen 'tores (epart ent and the Post Offices in India are a so amon! the ar!est networ% of o$t ets in the co$ntry reachin! pop$ ation across the co$ntry.

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The 4hadi 5 6illage industries 146IC3 was a so set $p post independence. The cooperati'e mo'ement was a!ain championed by the !o'ernment.

India7s 8argest retail Chains:

P(': -6+,999 Post offices: %69,999 46IC: $,999 C'( 'tores:+,-99

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1source 2usiness world

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In the past decade& the Indian mar%etp ace has transformed dramatica y. 6owe'er from the 15(7&s to the 47&s& in'estment in 'ario$s ind$stries was imited d$e to ow p$rchasin! power in the hands of the cons$mer and the !o'ernment<s po icies fa'orin! the sma sca e sector. The first attempts at or!anized retai in! were noticed in the te0ti es sector. Hne of the pioneers in this fie d was #aymond<s which set $p stores to retai fabric.

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#aymond<s distrib$tion networ% today comprises .7&777 retai ers and o'er .(1 e0c $si'e showrooms in o'er 1.7 cities of the co$ntry Hther te0ti e man$fact$rin! who set $p their own retai chains wee #e iance- which set $p 9ima showrooms and ?arden Si % +i s& which set $p ?arden 9are i showrooms.

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The /volution of retail in India

Traditional Formats Itinerant Sa esman 6aats +e as +andis etc.

Established formats =irana shops ;on'enienceI department stores PDSI fair price shops PanI Beedi shops

Emerging Formats >0c $si'e retai o$t ets 6ypermar%et Interna retai +a s I Specia ty +a s +$ tip e0es Fast food o$t ets Ser'ice !a eries

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(rivers of Retail change in India

Changing Inco e Profiles:

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Steady economic !rowth f$e ed the increase in disposab e income in India. The a'era!e midd e c ass fami yBs disposab e income rose by more than .7F between 1555-.773. (i inishing difference 2etween Rural and ur2an India: #$ra India acco$nts for o'er 3(F of India pop$ ation and this in itse f offers a tremendo$s opport$nity for !eneratin! 'o $me dri'en !rowth. Ta0 benefit. In year .77.-73 :I; so d (7F of its po icies in r$ra India. Same BS,: a so so d its (7F connection in sma towns .

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Changes in Consu ption patterns:

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Hcc$pationa chan!es and e0pansion of media ha'e ca$sed a si!nificant chan!e in the way the cons$mer i'es and spends his money. The chan!es in income bro$!ht abo$t chan!es in the aspirations and the spendin! patterns of the cons$mers. the b$yin! bas%et of the cons$mer chan!ed The e ergence of a *oung /arning India : ,ear y 37F of the Indian pop$ ation is be ow the a!e of 3". ta%in! ad'anta!es of emp oyment opport$nity in the boomin! ser'ice sector these yo$n! Indians are redefinin! ser'ice and cons$mption patterns

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Pro inent sector in Indian retail

; othin!& te0ti es and fashion )ccessories: .. Food J food Ser'ices: 3. ;ons$mer D$rab es: ". Boo%s J +$sic: Hther emer!in! sectors (. @ewe ery retai 1. Footwear retai 3. Time /ear #etai 4. F$e #etai I petro retai
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Challenges to retail (evelop ent in India

#etai not bein! reco!nized as an ind$stry in India. The hi!h costs of rea estate. :ac% of )de2$ate infrastr$ct$re. +$ tip e and comp e0 ta0ation system.

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'i;e of the organi;ed retail

ar"et 1Rs Cr3

2001-02

2007

!"# $%&
Ccompo$nd )nn$a !rowth rateD

T#T$% Food &lothing &ons.'ura(les )oo*s + Music

1',000 1,)00 *,+,0 1,',0 *,0

(7,21' 7,*7( 10,*2( (,7)7 1,*2'

1) (( 1' 1) 2'

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,hare of organi-ed + unorgani-ed retail .ith com"arison

$A%ISTAN 1 INDIA 3 CHINA IND"N#SIA RA!IL THAILAND MALASIA TAIWAN USA

99 97

20 30 36 40 55 81 85
40%

80 70 64 60 45 19 15 60% 80% 100% ORGANISED UNORGANISED

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Retail Trade/ India0 U, and &hina

Trade 1< 2n3

/ plo* ent 1=3 $ %) %).6?%6

'hops 1 illion3 %) ).$ %5.+

%>9?+@+69 +>99

Organi;ed 'ector share 1=3 )?+ )9 >9

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