Retailing Management – An Introduction

Prof. Shilpa Chadichal

 Outline

• What is Retailing.
• A Retailer’s Role in a Distribution Channel.
• Economic significance of Retailing.
• Opportunities in Retailing.
• The Retailing Management Decision Process.
• Case study.
Evolution of Retail Industry
Evolution of Retail
Evolution of Indian retail
Weekly Markets
Kiranas Stores
Kadi stores and cooperatives
Evolution of Retail
 Hyper/super Markets

• video
 What is Retailing?

• Retailing
• Consists of the final activity and steps needed to place a
product in the hands of the consumer or to provide services to
the consumer.
• It is the set of business activities that adds value to the
products and services sold to consumers for their personal or
family use.

• A retailer is a business that sells products and/or

services to consumers for personal or family use.
 Examples of Retailers

• Retailers:
-Sears, McDonalds, Amazon.com, , PVR Theaters,
PANTALOON RETAIL INDIA LTD, LANDMARK LTD ,
RAYMOND LTD,etc.

• Firms that are retailers and wholesalers that sell to

other business as well as consumers:
- Metro, Wal-mart, Office Depot, The Home Depot ect,
Staples etc.
 E-tailing

• With households
experiencing an increasing
poverty of time, but rising
incomes, more households
are shopping for groceries
online and having them
delivered to their homes.
 Most Popular On-line Categories

Australia Canada Germany United

States

1 Books Computers Books Books

2 Computers Books Computers Computers

3 CDs CDs CDs CDs

4 Tickets Tickets Tickets Apparel

5 Apparel Apparel Videos Tickets

 A Retailer’s Role in a Distribution Channel

• A retailer is a business that sells products/or services to

consumers for their personal or family use.

• Retailer are the final Business in a distribution channel that

links manufactures to consumers.

• A distribution channel is a set of firms that facilitate the

movement of products from the point of production to the
point of sale to ultimate consumer.
 Distribution Channel

PPT
PPT1-4
1-4
Distribution
Distribution Channel
Channel
 Channel Levels-Consumer Marketing

0-Level 1-Level 2-Level 3-Level

Manufacturer Manufacturer Manufacturer Manufacturer

Wholesaler Wholesaler

Jobber

Retailer Retailer Retailer

Consumer Consumer Consumer Consumer

Manufacturer’s Perspective

The Four P’s of Marketing

Retailers
Retailersare
arepart
partof
ofthe
the
distribution channel
distribution channel
Product

Distribution Price

Promotion
 A Retailer’s Role in a Distribution Channel

• In some distribution channels, the manufacturing,

wholesaling, and retailing activities are performed by
independent firms, but most distribution channels have
some vertical integration.

• Vertical integration means that a firm perform more

than one set of activities in the channel, such as
investments by retailers in wholesaling or manufacturing.
 BACKWARD FORWARD
NO INTEGRATION INTEGRATION INTEGRATION

Raw Material Raw Material Raw Material

Intermediate Intermediate Intermediate

Manufacturing Manufacturing Manufacturing

Assembly Assembly
Assembly

Distribution Distribution
Distribution

End
Customer End Customer End
Customer
 A Retailer’s Role in a Distribution Channel

• Backward integration arises when a retailers performs

some distribution and manufacturing activities.

• Forward integration is when a manufacture undertake

retailing activities.
 Functions performed by Retailers

• Breaking bulk.
• Providing Assortment
• Holding Inventory.
• Providing services.
 How Retailers Add Value

• Breaking Bulk
-Buy it in quantities customers want
• Holding Inventory
-Buy it at a convenient place when you want it
• Providing Assortment
-Buy other products at the same time
• Offering Services
-See it before you buy, get credit, layaway
 How Retailers Add Value

The value of the product and service increases

as the retailer performs functions.
Doll can be bought
on credit or put on
layaway

Doll is featured on
floor display

Doll is offered in
convenient locations
in quantities of one
Doll is developed in
several styles
Doll is developed at
manufacturer
 Social and Economic
Significance of Retailing

• Support for community

• Retail Sale
• Employment
• Global Retailers
• Opportunities.
• Management training opportunities
• Entrepreneurial opportunities
Support for community and
Employment

• Retailers are also responsible for developing many

innovative products and services.
• Example: Big Bazaar, Reliance etc.
• http://www.yourstory.in/entrepreneurs/entrepreneur-of-th
e-week/1528-anand-kumar-super-30-patna

• India retail industry is the largest in India, with an

employment of around 8%
% Contribution in GDP &
Employment

Percentage Contribution to GDP by Various Sectors Percentage Contribution of Labor Force by Various Sectors
% Contribution of sectors
to GDP
 Retail Sales

• The Indian retail industry Comprised of organized and

unorganized sectors. The organized sector will be 20% of
the total market share.
• India retail industry is one of the fastest growing industries
in India, especially over the last few years.
• With growing market demand, the industry is expected to
grow at a pace of 25-30% annually.
• The India retail industry is expected to grow from Rs.
35,000 crore in 2004-05 to Rs. 109,000 crore by the year
2010.
 Organized Retailing in India (2010)

Organized retail INR 109,000 crore

Clothing, Textiles &Fashion accessories 39%

Footwear 9%

Jewellery & Watches 7%

Mobile handsets & accessories 3%

Health & Beauty (including services) 2%

Food & Grocery 18%

Durables 13%
Books, Music & Gifts 3%

Home 3%
 % Contribution of Retail
sectors to GDP Economic Significance of Retailing
• The contribution of retail industry to India’s GDP is more than
13%.

• Indian retail industry (organized as well as unorganized) spreads

over more than 6 million outlets (2.4 million urban and 3.6 million
in rural).

• 8 per cent of India’s population is engaged in retail (compared to

20 per cent in the United States)..

• Given the size, and the geographical, cultural and socio-economic

diversity of India, there is no role model for Indian suppliers and
retails to adapt or expand in the Indian context. Hence Indian
retailers have to find a suitable model and adopt it to the Indian
context.
Comparison of GDP
Contribution

Contribution of Services Industries to India’s GDP

 Nature of Retail Industry is Changing

To Today’s Retailer

Mom and Pop Store

 Indian Retail Scenario At A Glance

• India’s first true shopping mall – complete with food courts,

recreation facilities and large car parking space – was
inaugurated as lately as in 1999 in Mumbai. (This mall is
called “Crossroads”).

• An FDI Confidence Index survey done by AT Kearney,

showed that the retail industry is one of the most attractive
sectors for FDI (foreign direct investment) in India and if
allowed, foreign retail chains would make a great impact on
Indian retailing.

• In India still, more than 60% sales in retail comes from food
items only.
 A Few Indian Retailers:

• Pantaloon is one of the biggest retailers in India with

more than 450 stores across the country.
Headquartered in Mumbai.

• Pantaloons – The different formats of Pantaloons are

1. Big Bazaar – The Discount Hypermarket
2. Pantaloons - The Family Store
3. Central Mall – One point shopping
4. Food Bazaar – Food & Grocery Super Market
 A Few Indian Retailers

• RPG Group is one of the earlier entrants in the

Indian retail market, when it came into food &
grocery retailing in 1996 with its retail Foodworld
stores
• RPG – The different retail formats of RPG group are:
1. Spencer’s (earlier known as Food World) – Super Market
2. Spencer’s Hypermarket
3. Health and Glow
4. Music World
 Share of Organized Retailing in Countries

Country/Region Share of Organized Retailing

USA 80%
Western Europe 70%
Malaysia 50%
Thailand 50%
Brazil 40%
Argentina 40%
Phillippines 35%
Indonesia 25%
South Korea 15%
China 10%
 Forces Governing Indian
Retailing

1. Consumer Pull: Rising income and greater purchasing

power of the Indian customer and the tremendous growth
of the middle class in the post-liberalization era.
2. Growing urbanization leading to a variety of customer
needs.
3. Significant increase in the number of brands in the Indian
market leading to a larger option set for the Indian
customer.
4. Media boom leading to an increased level of awareness
levels and exposure to the international trends and
concepts.
 Forces Governing Indian
Retailing

5. Changing demographics propelling the growth of

retail industry.
6. Psychographics changes in the Indian consumer
behavior
7. Shopping is becoming an outing or a way of family
entertainment that means that families now
spend greater time in shops
Retailing : The Road Ahead

•India is a nation of shopkeepers and it has more outlets

than any other country in the world.

• But retail outlets still exist in all shapes and sizes –

Panwalla to Shoppers’ Stop. However most of these retail
outlets are kirana shops that are smaller than 500 sq.ft. in
area, provide very basic offerings and hardly use any
technology.
Retailing : The Road Ahead

• According to Mr. Nedungadi, President, Madura Coats,

“Retailing is becoming all about great ambience, more
choice and convenient location.
• An emerging trend is also that of the value consciousness
of the consumer.” So Indian retail industry has a long way
to go.
• With corporate investments coming to organized retailing,
the scope and growth of organized retailing is looking bright
for Indian retail Industry.
 Opening the door partly – 51% FDI permitted to Single
Brand Retail

•The most significant development in regulatory

aspects influencing the Indian retail industry is the
government’s decision to allow foreign direct
investment (FDI) up to 51% in retail outlets meant
exclusively for ‘single brands’.
•Previously single brands had to enter India only
through joint ventures or the franchisee route. Now
brands can enter with a majority stake of 51% along
with a local partner. This definitely gives the
international brands more space to play ground.
 Challenges facing Indian
retail Industry

• The tax structure in Indian favors small retail business.

• Lack of adequate infrastructure facilities.
• High cost of real estate.
• Dissimilarity in consumer groups.
• Restrictions in Foreign Direct Investment.
• Shortage of Retail study options.
• Shortage of trained manpower
• Low retail management skill
 The Future

• The retail industry in India is currently growing at a great

pace and is expected to go up to US$ 833 billion by the
year 2013. It is further expected to reach US$ 1.3 trillion
by the year 2018 at a CAGR of 10%.
• As the country has got a high growth rates, the consumer
spending has also gone up and is also expected to go up
further in the future. In the last four year, the consumer
spending in India climbed up to 75%.
• As a result, the India retail industry is expected to grow
further in the future days. By the year 2013, the organized
sector is also expected to grow at a CAGR of 40%.
 Opportunities in Retailing

• Management Opportunities.
• Entrepreneurial Opportunities.
 Kishore Biyani (Ceo, Future
Group)

• kishore Biyani, born in a middle class marwari trading family,

was not satisfied with family business.
• While in college, he noticed one of his fashion conscious
friend wearing trouser made out of new material called
“stonewash” farbic, which looked fashionable, simply
because it was so different.
• This gave him a idea and he started selling stonewash fabric
to small shops in mumbai.
 Kishore Biyani (Ceo, Future
Group

• It was a big success and he made his first profit. Thereafter,

nothing could stop his entrepreneurial instinct and he
ventured to redefine the retailing business in India with the
launch of Pantaloons, Big Bazaar, and may more retail
formats.
• Today, Kishore biyani’s Future Group, with Rs.3,550 crore
turnover, is one of the country’s leading business group.
 CEO of Future Group

• The CEO of Future

Group is Mr. Kishore
Biyani.
PRODUCTS

1) Apparels
2) Food & grocery
3) Accessories
4) Cosmetics
5) Footwear
6) Electronics
7) Home décor
 PRICE :

APPARELS

WOMEN’S WEAR
MEN’S WEAR
KID’S WEAR From Rs.99 to Rs.1000
From Rs.99 to Rs.1500
From Rs.90 to Rs.300 & above
And above
 PROMOTION

• “Saal ke sabse saste 3 din”- 26th January,15th August,

Diwali.
• Future Card(3%).
• Shakti Card.
• Advertisements (Print ads, TV ads, Radio ads).
• Hafte ka sabse sasta din-low prices on Wednesday.
• Monthly bachat bazaar.
• Buy one get one free and complementary gifts.
PROMOTION :
CELEBRITY PROMOTIONS
PLACE :

Big Bazaar,Bengaluru

Big Bazaar,Hyderabad
FUTURE GROUPVS SHOPPERS STOP
SAWARIYA VS OM SHANTI
OM

• Sawariya and Om Shanti Om,the two big releases in

the year 2009 were fighting to out do each other in
order to race in the box office.
• Sawariya tied up with the Future Group for a special
range of merchandise which included beauty products
and bed linen.
• In reaction to this SRK led the whole OSO team to
promote the branding of the film with another retail
giant-Shoppers Stop.
 Dave Thomas (wendy’s)

• Dave Thomas appeared in over 300 television commercials

and became the most well-know restaurateur in united states.
• His unassuming persona conveyed an image that the chain
was owned by a caring grandfather rather than a faceless
corporation, a lesson he learned from colonel sanders,
founder of KFC.
• Thomas became millionaire when he sold his KFC franchises.
He soon decided to open some fast food restaurant to pay for
his children's college educations.
• Wendy’s successes begins by targeting young adults by
offering sandwiches.
 The Retail Management
Decision Process

• Understanding the World of retailing.

• Developing a Retail Strategy
• Implementing the Retail Strategy
 Questions -2mks

• What is retailing?
• What is Hyper Market?
• Define E-Tailing.
 Questions -8mks

• What are the functions performed by a retailer?

• What would be the social and economic impact of
retail development in India?
• Discuss the retailing management decision process.
• Discuss the economic significance of retailing.
• Thank You