Topic

Introduction to Retailing
Learning objectives
After studying this chapter, you should be able to :
Define the concept of retailing

Highlight the significance of retailing in the marketing mix

Elaborate on the role of the retailer in the marketing channel

Provide an overview of the global retailing scenario

Focus on the current status of retailing in India

Understand the various theories of retail evolution

Grasp the uniqueness of Indian retail evolution

throw light on the current growth opportunities and trends in India

Definition and scope
of retailing
What is “Retailing”?
The Word ‘retail’ is derived from the French word ‘retailer’, which
means ‘to cut a piece off’ or ‘to break bulk’. In simple terms, it
implies a first-hand sales or service transaction with a customer.
Scope:
Retailing involves a direct interface with the customer
It’s the coordination of business activities from the start till the
end – handled right from the concept or design stage of a product
or offering, until its delivery and post-delivery service to the
customer.
Retailing in the Marketing Mix:
Retailing forms and integral part of the marketing mix
Includes the major elements like product, place, price, people,
presentation and promotion.

Place relates to the distribution and availability of products in various

locations
Initially, the customers are first introduced to the product at a retail
store.
Second of all, the organizations sell their products and services
through these retail outlets and get feedback on the performance of
their products and customers’ expectations about them.
Retail stores serve as communication hubs for the customers,
commonly known as the Point Of Sale (POS) or the Point Of Purchase
(POP)
The Retail channel:
In retailing as products and services are distributed to reach the end
consumers, they pass through a few chains of businesses or
intermediaries and this partner led ‘pathway’ to reach customers is
called the Retail Channel.

The pivotal role of retailer in the marketing channel

Channel Power
Channel power refers to the extent to which the retailers can
influence the marketers’ decisions and opinions like pricing,
promotion and product strategy.
Channel Power emanates from the point of customer contact
(the retailers), which is the one-point perspective of collecting
feedback or information from the customers to the marketer /
manufacturer.
Owing to such communication capabilities, the channel is fixed
at a position to influence the customers’ decisions
Organised Retailing Defined
Organized retailing refers to the
trading activities solely undertaken by
certain licensed retailers who are
registered under the required norms of
government regulations like shops and
establishments act, sales tax, food safety
standards authority of India (FSSAI),
labour laws, etc., and they stand
authorised for every transaction and
sales by giving cash memos to each
buyer
Unorganised retailing
Refers to the traditional retailing process where small retailers
like local ‘kirana’ shops, ‘mom and pop’ shops, variety shops,
petty convenient stores, hand cart sellers, pavement vendors
etc., transact their very own business on petty cash without
registering or billing any sales transactions
The Global Retail Scenario
 Retailing plays a dominant role in many developed countries
 It is better organized than what it is in India.
 The retail industry has emerged to be the main player in the
business sector and is expected to reach US $22 trillion soon
in the near future

Table 1: Percentage of organised and traditional retailing globally

 More than 50 of the Fortune Global 500 companies
and 25 of Asia’s topmost 200 companies are
retailers.
 In many developed countries like the USA, most part
of retailing is accounted for by the organised sector.
 Organised retail is currently dominated by developed
countries like the USA, EU and Japan constituting 80%
of the world’s retailing.
 Retail is a significant contributor to the overall
economic activity across the globe: the total retail
share in the World GDP is 27% while in the USA it
accounts for 22% of the GDP.
 The Service sector accounts for a large share of GDP
in many developed economies. And the retail sector
is a strong hold and key component for the service
sector.
 The employment opportunity offered by the industry
is immense. In most of the developed nations more
than 30% of the country’s population is either
directly or indirectly employed in the retail sector. In
a few countries, the number of people employed in
retailing exceeds the number of people employed in
the manufacturing sector.
 Globally, retailing is customer-centric with an
emphasis on innovation in products, processes and
services. In short, the customer is King !
 South East Asia, Middle East, South America, and
BRIC (Brazil, Russia, India, and China) began to
emerge as strong economies and these countries
witnessed big growth opportunities for global
retailers.
The Indian Retail Scenario
 EXECUTIVE SUMMARY
Consumer expenditure in India (US$ billion)
 Indian retail one of the fastest growing markets in the world
due to economic growth.
4,000
 Retail market in India is projected to grow from an estimated 3,500
3,000 3,600
US$ 672 billion in 2017 to US$ 1,200 billion in 2021F. 2,500
2,000
 Retail industry reached to US$ 950 billion in 2018 and is 1,500
1,000 1,824
expected to reach US$ 1.1 trillion by 2020.
500
 Total consumption expenditure is expected to reach nearly US$ 0
2017 2020F
3,600 billion by 2020 from US$ 1,824 billion in 2017.
 India is the world’s fifth largest global destination in the retail
space and ranked 63 in World Bank’s Doing Business 2019.
Retail market in India (US$ billion)
 According to a report from Cushman & Wakefield, Delhi's
upscale Khan Market has become the world's 20th most 1,400
1,200
expensive retail location. 1,000
950 1,200
800
 Rising income and demand for quality products will boost 600
672
consumer expenditure. 400
200
0
2017 2018 2021F

Notes: CAGR - Compound Annual Growth Rate, F- Forecast, E – Estimated

Source: Ernst and Young, Price Waterhouse Cooper, Economic Times, MRRSIndia.com and Assocham - The Associated Chambers of Commerce and Industry of India

1
 EXECUTIVE
SUMMARY
FMCG market in India (US$ billion) Revenue from online retail in India (US$ billion)

120 70
100 60
103.70 60.00
50
52.75 40
80 30
14.50 32.70
60 49.00 20 13.00
10 17.80
40
0
20 2015 2016 2017 2018 2020F
2016 2018 2020F
0

 FMCG market is expected to increase to US$ 103.7 billion by 2020 from Rs 3.4 lakh
crore (US$ 52.75 billion) in FY18.
 Revenue generated from online retail is projected to grow to reach US$ 60 billion by
2020.
 Increasing participation from foreign and private players will boost retail
infrastructure.

Notes: CAGR - Compound Annual Growth Rate, F – forecast,, All the years denote calendar year
Source: indiaretailing.com, eMarketer, Nielsen India

1
  Healthy economic growth, changing
 Collective efforts of financial houses and
demographic profile, increasing disposable
income, changing consume taste and banks with retailers are enabling consumers
preferences are driving growth
r in the organised retail to go for durable products with easy credit.
market in India.
Increasing purchasing power has led to growing
demand.

ADVANTAGE
INDIA
 Foreign retailers are continuously entering the  About 51 per cent FDI in multi-brand retail.
Indian market.  100 per cent FDI in single-brand retail under
 Cumulative FDI inflow in retail between April the automatic route.
2000 and March 2020 stood at US$  Goods and Service Tax (GST) was introduced
2.12 billion. as a form of single unified tax system.
 India’s retail sector attracted US$ 970  To provide a level-playing field to
million from various private equity (PE) stakeholders, the Government is planning to
funds in 2019. synchronise policies of retail, FMCG and E-
commerce within a single policy framework.

Note: FY – Indian Financial Year (April–March), NMDP – National Maritime Development Programme, FDI – Foreign Direct Investment, MMT – Million Metric
Tonnes,
Source: Report of the Task force on Financing Plan for Ports, Government of India, JLL report, Anarock Retail

6 Retail
 EVOLUTION OF RETAIL IN INDIA
Pre 1990s 1990-2005 2005-2010 2010 onwards

 Substantial investment  Cumulative FDI inflow from April

 Manufacturers opened their  Pure-play retailers realised the
commitment from large Indian 2000 to December 2019 in the
own outlets potential of this market
corporates retail sector reached US$ 2 billion
 Majority in the apparel segment  Retail 2020: Retrospect, Reinvent,
 Entry in food and general
merchandise category Rewrite

 Pan-India expansion to top 100  Movement to smaller cities and

rural areas
cities
 More than 5-6 players with
 Repositioning by existing revenue over US$ 1 trillion by
players 2020
 Large-scale entry of international
brands
 Approval of FDI limit in multi-
brand retail up to 51 per cent
 Rise in private label brands by
retail players
 Sourcing and investment rules for
supermarkets relaxed
 E-commerce emerged as one of the
major segments
 100 per cent FDI in single- brand
retail under the automatic route

Source: Technopak Advisors Pvt Ltd, BCG

1
Indian Retail Evolution

Indian Retail Evolution

 RETAIL FORMATS IN INDIA
Mono/exclusive Exclusive showrooms owned or franchised out by a Complete range available for a given brand;
branded retail shops manufacturer certified product quality

Multi-branded retail Focus on particular product categories and carry Customers spoilt for choice with so many brands on
shops most of the brands available display

 Display most of convergence as well as

Convergence retail One-stop shop for customers; many product lines of
consumer/electronic products, including
outlets different brands on display
communication and IT group

 Online shopping facility for buying and selling

Highly convenient – provides 24X7 access, saves
E-retailers products and services; widely used for
time and ensures secure transaction
electronics, health and wellness

Note: IT - Information Technology

Source: TechSci Research

2
 COMPETITIVE LANDSCAPE IN INDIAN RETAIL SECTOR

Retail

Supermarkets/ Cash and carry

Departmental stores Hypermarkets Specialty stores
convenience stores stores

 Pantaloon has 209  Big Bazar, Spencer  Aditya Birla Retail-  Titan Industries is a  Metro started the cash
stores Easy day and Reliance
More Supermarket large player, with 496 and carry model in
 Westside operates are some major
players (523 stores) World of Titan, India – operates 27
158 stores across 82
present in the market 262 Tanishq and stores across Mumbai,
cities  Spencer’s Daily (120
 Shoppers Stop had  Aditya Birla Retail 509 Titan Eye+ shops Kolkata, Delhi,
stores)
89 stores in India, as of (More Hypermarket) Punjab, Hyderabad
– 20 stores  Vijay Sales, Croma
2019  Reliance Fresh (621
and Bengaluru
 Trent has 10 stores and E-Zone
 Lifestyle operates stores)
under retail chain Star in  Reliance Retail
across 77 stores in  REI 6Ten (350 stores)
India  Big Bazaar operates consumer electronics operates 52 cash and
 Reliance Retails 295 stores  HyperCITY (20 carry stores called
 Landmark and
operates 670  Spencer Hyper has 37 stores) ‘Reliance Market’ as
Crossword in books
fashion concept stores across the of FY19
(under ‘Trends’ brand country and gifts segment
name) stores across
350 cities in India

Source: Company websites, Press Release

 STRONG GROWTH IN THE
INDIAN RETAIL INDUSTRY
 The retail sector in India is emerging as one of the largest sectors in the Market size over the
Visakhapatnam portpast few(million
traffic years (US$ billion)
tonnes)
economy. It contributes 10 per cent to GDP and 8 per cent to employment.
 The total market size of Indian retail industry stood at US$ 950 billion in 2,000
*CAGR 21%
2018 and is forecast to reach US$ 1,200 billion by 2021 and US$ 1,750
1,800
billion by 2026.
 India will become a favourable market for fashion retailers on the back of 1,600
a large young adult consumer base, increasing disposable income and
relaxed FDI norms. 1,400

1,200
 Revenue of India’s offline retailers, also known as brick and mortar
(B&M) retailers, was expected to increase by Rs 10,000-12,000 crore (US$ 1,000
1.39-2.77 billion)^ in FY20.
800
 Experiential retail draws the concentration to a customer driven approach
where the client can interact with products or brands rather than being a 600
passive participant.
400

200 0

Note: *CAGR up to 2018, F – Forecast, E – Estimated , ^as per CRISIL

Source: indiaretailing.com, BMI Research, Consumer Leads report by FICCI and Deloitte - October 2018
 ORGANISED RETAIL
IN NASCENT STAGE
Significant scope for expansion

3% 7%
9%

18%

FY19 FY21F

75%
88%
Traditional retail Organised retail E-commerce*

In FY19, traditional retail, organised retail and E-commerce segments accounted for 88 per cent, 9 per cent and 3 per cent
of the market, respectively.
The organised retail market in India is growing at a CAGR of 20-25 per cent per year.

It is projected that by FY21, traditional retail will hold 75 per cent of the total retail market, followed by organised retail at
18 per cent and E- commerce retail at 7 per cent.
The unorganised retail sector in India has a huge untapped potential for adopting digital mode of payments as 63 per cent of
the retailers are interested in using digital payments like mobile and card payments.

Note: F – Forecast, * - e-commerce market here refers to sale of products and services through electronic transactions, home shopping is considered a part of e-commerce

Source: BCG , KPMG- indiaretailing.com, Deloitte Report, Winning in India’s Retail Sector, Centre for Digital Financial Inclusion (CDFI) report, Crisil
 SECTOR’S HIGH GROWTH POTENTIAL IS ATTRACTING
INVESTORS
 India has occupied a remarkable position in FDI Confidence Index 2019
global retail rankings. The country has high
market potential, low economic risk and 2.5

moderate political risk.

 India’s high growth potential compared to global 2
peers has made it a highly favourable destination.
According to a study by Boston Consulting
1.5
Group, India is expected to become the world's
third largest consumer economy by reaching US$
400 billion in consumption by 2025. 1

 In FDI Confidence Index, India ranked 16 (after

US, Canada, Germany, UK, China, Japan, 0.5

France, Australia, Switzerland and Italy).

 India ranked first in the Global Retail 0

Development Index 2017 based on rising middle

class and rapidly growing consumer spending.

Note: FDI - Foreign Direct Investment

Source: AT Kearney 2019 FDI Confidence Index
 RISING PROMINENCE OF ONLINE RETAIL
Online retail in India (US$ billion) Indian E-commerce Market (US$ billion)

90
80
80 84
70
73.00 70
60.00 60
60
50
50
40
40 39
32.70 30
30 33
20
20 17.80 10 20
14.50
10 0 0
2016 2017 2018 2020F 2022F 2015 2017 2018 2021

 Online retail market is estimated to reach US$ 60 billion by 2020 from US$ 32 billion in 2018. It is projected to reach US$ 73.00
billion by 2022F.
 During the festive sale period of September 29-October 4, 2019, Indian E-tailers achieved US$ 3 billion of gross merchandise value
(GMV).
 The Government plans to allow 100 per cent FDI in E-commerce under the arrangement that the products sold must be manufactured
in India to gain from the liberalised regime.
 India ranked 73 in the United Nations Conference on Trade and Development's Business-to-Consumer (B2C) E-commerce Index
2019.
 Online retailers now deliver to 15,000-20,000 pin codes out of nearly 100,000 pin codes in the country.

Notes: APMEA - Asia/ Pacific, Middle East and Africa, F-

Forecast
Source: MasterCard Worldwide Insights 4Q 2010, ANAROCK, ASSOCHAM, UN Report 'The power of 1.8 billion‘, Nasscom annual guidance 2018, RedSeer Consulting, eMarketer
 Retail

STRATEGIES
ADOPTED
 STRATEGIES ADOPTED
Strong distribution  It is imperative for a retailer to have a strong distribution and logistic network to succeed in this sector. Players follow a distribution
 It is imperative for a retailer to have a strong distribution and logistic network to succeed in this sector. Players follow a
and logistic network that suits them the best. For example, Shoppers Stop follow a “hub and spoke” model for its distribution network to
distribution network that suits them the best. For example, Shoppers Stop follows a “hub and spoke” model for its distribution network
network increase efficiency and productivity.
to increase efficiency and productivity.

 In February 2019, Future Consumer partnered with T Choithram & Sons to start offering products in the Middle East.
Expansion  Huawei signed a partnership with Micromax to expand its retail presence in India.
 As of November 2019, Xiaomi had the largest retail network in India with 2500 stores and presence across 790 cities.

 Retailers are exploring multiple channels to maximise sales. Omni-channel retailing is being adopted by many retailers in India.
Shoppers Stop is making efforts to be an omni-channel retailer. Ezone has launched an online platform, which has led to increase in
Omni-channel sales.
retailing
 As of January 2019, Medlife aimed to expand its retail pharmacy segment with integration of omni-channel strategy by opening 750
pharmacies across India by end of 2020.

 Certain retailers adopt ‘first price right’ approach. Retailers do not offer discounts under this strategy, they directly compete on the
Lowering prices
selling price by offering best price without any markdowns.

 Most retailers have advanced off-season sales from 15 days to a month with discounts of 20-70 per cent on certain products. Also,
Offering discounts
higher discounts and other value-added services are offered to members.

Source: Company website, News Articles

 STRATEGIES ADOPTED
Offering value-  Companies offer innovative value-added services like customer loyalty programmes and happy hours on shopping deals. Offers for
added services senior citizens, contests for students and lottery gains are now very common.

Leveraging  To keep customers on shop floors for a longer time and increase conversions, retailers are now pitching to partner with
partnership manufacturers, service providers, and financial companies to create a buzz around certain product categories.

 Critical components of supply chain planning applications help retailers to maintain profit margins. Innovative solutions like
Strong supply
performance management, frequent sales operation management, demand planning, inventory planning, production planning and
chain
lean systems can help retailers to get advantage over competitors.

 To diversify the product offerings and tab the growing luxury retail segment, retailers are forming JV with foreign luxury brands.
Joint Venture (JV) Reliance Brands Ltd entered a JV with Bally, a Swiss luxury brand, to exclusively market its products in India.
 In May 2019, Warburg Pincus and Runwal Group entered into a JV to form US$ 1 billion retail mall platform.

Changing the  Retailers are providing more assortments for private level brands to compete with other supplier brands. New product development,
perception aggressive retail mix and everyday low pricing strategy might help to get edge over supplier brands.

Hyper-  Indian retailers use hyper-personalisation models based on behavioral data, brands performance, demographic preference and pin
personalisation codes as marketing strategy to boosts sales.

 Online retail segment offers cash-on-delivery and manufacturers’ warranty to boost E-retailing in consumer durables sector.
Cash-on-delivery  Cash-on-delivery is the preferred payment option with over 30 per cent buyers opting for it in India.

Source: International

29 Retail For updated information, please visit www.ibef.org

 Retail

GROWTH DRIVERS
GROWTH DRIVERS FOR RETAIL IN INDIA

Easy consumer Favourable

credit and increase in demographics
quality products

Growth Drivers
Brand Rise in income
consciousness and purchasing
power

Change in
consumer mindset
 GROWTH DRIVERS FOR RETAIL IN INDIA
Consumer  India’s per capita GDP increased to Rs 143,048 (US$ 1,982.65) in FY19 from Rs 129,901 (US$ 1,800.43) FY18.
preference  Indian consumers are now shifting more towards premium brands by paying more for value and service.

Brand  Factors like young demographic composition, increasing personal disposable income, preference towards affordable luxury and
consciousness rising middle class population are developing preferences for specific brands.

Consumer  Consumers have become more comfortable using online services due to demonetisation.
finance  Online retail segment provides various credit and payment options driven by increasing internet penetration, 24*7 accessibility,
opportunity convenience and secured transactions.

 Department for Promotion of Industry and Internal Trade (DPIIT) approved three foreign direct investments (FDI), Mountain Trail
FDI approval Food, Kohler India Corporation, and Merlin Entertainments India in single-brand retail.
 DPIIT has approved two FDI proposals worth more than Rs 400 crore (US$ 62.45 million) within the retail sector.

 As of November 2019, IKEA planned to open three stores in India with an investment of Rs 117.96 billion (US$ 1.69
Investment billion).
 As of November 2019, Kohler India planed to double its retail network in the country in the next three years.

Source: News Articles, Ministry of Statistics and Programme Implementation, Anarock

Retail
 FDI POLICY DETAILS ON SINGLE AND MULTI-BRAND
RETAIL IN INDIA

 Minimum investment cap is US$ 100 million.

 30 per cent procurement of manufactured or processed products must be
from SMEs.
51 per cent FDI in multi-  Minimum 50 per cent of total FDI must be invested in backend
brand retail Status:
Policy passed
infrastructure (logistics, cold storage, soil testing labs, seed farming and
agro-processing units).
 Removes middlemen and provides better price to farmers.
 Development in retail supply chain system.
 50 per cent jobs in retail outlet could be reserved for rural youth and a
certain amount of farm produce to be procured from poor farmers.
 To ensure public distribution system (PDS) and food security system
(FSS), the Government reserves the right to procure a certain amount of
food grains.
 It will keep food and commodity prices under control. It will also cut
agricultural waste as mega retailers would develop backend
infrastructure. Consumers will receive higher quality products at lower
prices and with better service.
 FDI POLICY DETAILS ON SINGLE AND MULTI-BRAND
RETAIL IN INDIA

 Products to be sold under the same brand internationally. Sale of multi-brand

goods is not allowed even if produced by the same manufacturer.
 100 per cent FDI allowed in single-brand retail under the automatic route.
100 per cent FDI in
single-brand retail  Single-brand retail entities (SBRT) would be permitted to set off their
Status: Policy passed incremental sourcing of goods from India for global operations during the
initial five years, starting from the 1st April of the year of the opening of first
store, as against the compulsory sourcing requirement of 30 per cent of
purchases from India. After completion of five-year period, the SBRT entity
will be required to meet the 30 per cent sourcing norms directly towards its
India’s operation, on an annual basis.
 100 per cent FDI in retail trading of food products manufactured or produced
in India.
 Liberalisation of FDI is expected to give a boost to Ease of Doing Business
and Make in India.
 INDIAN RETAIL IS SET TO BENEFIT FROM FDI POLICY

Benefits of FDI in
Indian retail

Technological Infrastructure
Increase in employment Removing middlemen
advancement investment

Benefiting Indian
Sector Entry route FDI limit
manufacturers

Wholesale cash and

Automatic 100%
carry trading

Single-brand product
Automatic 100%
retailing

Multi-brand, front- Foreign Investment and

51%
end retail Promotion Board
 SERVICE TAX (GST)
WOULD SIMPLIFY TAX  Elimination of tax cascading is expected to
 Goods and Service Tax (GST) as a unified tax lower input costs and improve profitability.

STRUCTURE
regime is expected to lead to re-evaluation of
procurement and distribution arrangements.
 Removal of excise duty on products would
 Application of tax at all points of supply chain
is likely to require adjustments to profit
margins, especially for distributors and
retailers.
result in cash flow improvements.

Goods and
Service Tax
(GST)
 Tax refunds on goods purchased for resale  Changes need to be made to accounting and
implies a significant reduction in the IT systems in order to record transactions in
inventory cost of distribution. line with GST requirements.

 Distributors are also expected to experience  Appropriate measures need to be taken to

cash flow from collection of GST in their ensure smooth transition to the GST regime
sales, before remitting it to the Government at through employee training, compliance under
the end of the tax- filing period. GST, customer education and inventory credit
tracking.

Note: CII: Confederation of Indian Industry

Source: TechSci Research
 RECENT M&A DEALS IN THE INDIAN RETAIL SECTOR

Acquirer name Target name Year Deal type

Reliance Retail Ventures Ltd (RRVL) Shri Kannan Departmental Store
March 2020 Acquisition
Private Ltd (SKDS)
Amazon Future Retail August 2019 Acquisition (49 per cent)
Aditya Birla Fashion and Retail Ltd Jaypore and TG Apparel & Decor Pvt
June 2019 Acquisition
(ABFRL) Ltd
Reliance Industries Ltd (RIL) Hamleys May 2019 Acquisition

Future Enterprises Ltd LivQuik Technology (India) Pvt. October 2018 Acquisition (55 per cent)
Ltd
Amazon and Samara Capital More September 2018 Acquisition
Genesis Colors Ltd (GCL), GLF
Lifestyle Brands, Genesis La Mode,
Reliance Retail Ventures Ltd (RRVL)
Genesis Luxury Fashion Pvt Ltd, September 2018 Acquisition
GML India Fashion and GLB Body
Care
Walmart Flipkart May 2018 Acquisition
Future Group HyperCity October 2017 Acquisition

Berger Paints Chugoku Marine Paints April 2017 Collaboration

Myntra InLogg April 2017 Acquisition
Flipkart owned Myntra HRX August 2016 Acquisition

Myntra MotoGP August 2016 Collaboration

Aditya Birla Fashion and Retail Forever 21 (India Business) May 2016 Acquisition

Source: Bloomberg and Thomson ONE Banker, News Articles

37 Retail For updated information, please visit www.ibef.org

 Retail

OPPORTUNITIES
 GROWTH VALUE PROPOSITION
Higher brand consciousness Rising incomes and purchasing power

Growing aspiration levels and appetite to

Credit availability
experiment

Growing young population and working Changing consumer preferences and

women growing urbanisation

Indian retail opportunity

Rapid real estate and infrastructure

Easy availability of credit
development

Emergence of new categories Expansion plans of existing players

Development of supply chain improving R&D, innovation and new product

efficiency development

Source: KPMG International 2011

 AMPLE GROWTH OPPORTUNITIES IN INDIAN RETAIL
INDUSTRY
 India is the fifth largest preferred retail destination globally.
Large number of
retail outlets  The sector is experiencing exponential growth, with retail development taking place not just in major cities and metros, but also in
tier II and tier III cities.

 The organised Indian retail industry has begun experiencing an increased level of activity in the private label space.

 The organised retail sector is forecast to witness strong growth in the coming years.
Private label
opportunities  The share of private label strategy in the US and UK markets is 19 per cent and 39 per cent, respectively, while its share in India is
just 6 per cent. Stores like Shopper Stop and Lifestyle generates 15 to 25 per cent of their revenue from private label brands.

 India‘s price competitiveness attracts large retail players to use it as a sourcing base.
Sourcing base  Global retailers such as Walmart, GAP, Tesco and JC Penney are increasing their sourcing from India and are moving from third-
party buying offices to establishing their own wholly-owned/wholly-managed sourcing and buying offices.

Luxury retailing is gaining importance in India. This includes fragrances, gourmet retailing, accessories and jewellery among many
others.
Luxury retailing Luxury market of India is expected to grow to US$ 30 billion by the end of 2020 from US$ 23.8 billion in 2017, supported by growing
exposure of international brands among Indian youth and higher purchasing power of the upper class in tier II and III cities, according to
ASSOCHAM.

Notes: FMCG - Fast Moving Consumer Goods

Source: Nielsen, Jefferies report
 Issues in Retailing
• How can we best serve our customers while earning a
fair profit?
• How can we stand out in a highly competitive
environment where consumers have so many choices?
• Low consumer confidence and high savings rates have
reduced consumer spending. At the same time retail
competition has increased through increased format
blurring (e.g., sales of cameras at office supply stores,
carpeting and major appliances at home improvement
centers).
• How can we grow our business while retaining a core
of loyal customers?
Approaches to the Study of Retailing

Institutional
Functional

Strategic