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PREFACE
 Departmental stores may be a comparatively recent phenomenon in India, with a
specially created ambience making shopping an experimental affair. Indeed, we are even
beginning to demand places where we can avail the luxuries of spending the whole day in one
place, taking advantage of a bouquet of services in which shopping is only a part. So you can
browse, window shop, make purchases, break off for a meal, take in some entertainment, and
listen to music. This concept of organized retail marketing, which has caught on like lightning, is
really just the creation of a distribution network that cuts out various intermediary costs and
creates a much smoother interface between manufacturer and customer. This organized network
which bridges the distance between the manufacturer and the consumer has seen many of the
world's leading entrepreneurs successfully walk down a particularly profitable road. With total
sales going up to $6.6 trillion, the industry today is the world's largest private industry and
accounts for over 8 per cent of the GDP in western countries. And now, it's India's turn. Today,
we stand at the crossroads of a retail revolution. After 50 years of unorganized retailing and
fragmented kirana stores with very basic offerings, fixed prices, zero usage of technology and
little or no ambience the industry have finally begun to move towards modernization,
systematization and consolidation.
Retailing has now become a key growth area. There has been an attitude change in the
way the Indian consumer thinks about shopping. What, were and how they buy is now the big
question. Over the last decade, there has been a significant evolution in his psyche, a change that
has been carefully recorded and documented by behavioral pundits. Although it is most
noticeable in large metros, its impact is also seen in small towns. The change was kicked off by
the economic liberalization of the 1900's and accelerated by the media (cable) boom following
the Gulf War, when the radical explosion in media images exposed the Indian consumer to the
lifestyle enjoyed in more affluent countries. And even within his own country. Earlier, it was the
lack of consumer culture along with low incomes that prevented the development of such
formats. But economic growth has now triggered off a spending spree, with India's middle and
high-in-come population suddenly realizing that they have enough disposable income to go for
the good times. As the low-income base shrinks, there is an ever- increasing expansion of the
higher income groups, with a corresponding demand for consumer goods that allows the deeper
penetration of high quality and higher priced products. The early indicators of this revolution are
the mushrooming of better quality retail outlets, a profusion of brands and various product
options. The Indian consumer who can discern a clear value propositions and unbeatable ranges
at unbeatable prices served to him on a platter. The retail industry is now beginning to evolve.
Traditionally, most retailers have very localized operations but this nature of the industry is fast
changing with the awareness that sources must be developed and a proper merchandising system
put in place. The pace of transformation has accelerated and today India has over 12 million
retail outlets. As a phenomenon, retail marketing has a radical impact and can bring in new
technologies, systems and mindsets. It can improve overall labour, productivity and employment,
all in the name of providing the consumer with a better range of products at better prices in a
better ambience.
Retail, India's largest industry is driven by the markets' ability to provide better products
in a comfortable ambience at affordable prices. The growth of large multi-brand apparel outlets
is one result. These outlets are usually 20,000-50,000 sq ft in size, have their own parking space,
and separate counters for perfumes, accessories, men's wear, women's clothing and children's
clothing. Some stores also have toys, books, home wear, footwear and music. Some of these
retailers have begun to develop a private label brand, to supplement their range and improve their
margins. These have become significant brands in their own right. Similar departmental
stores/multi brand outlets are likely to develop into a significant format in the Indian market over
the next decade. The players who can make organized retailing an integral part of India will be
the ones who reap the benefits at the end of the change process. The industry however will have
to work in tandem with the government and manufactures to build a more positive environment
for retail and cater to the demand for better products and retailing from India's first generation of
demanding cash rich consumer.

THE CONCEPT OF RETAILING

Retailing consists of the business activities involved in selling goods and services to
consumers for their personal, family, or household use. It includes every sale of goods and
services to the final consumer.
In a distribution channel, retailers play a key role as the contact between manufacturers,
wholesalers, other suppliers and the final consumer. Many manufacturers would like to make one
basic type of item and sell their entire inventory to as few buyers as possible. But final
consumers usually want variety and a limited purchase. So, retailers collect an assortment of
goods and services from various sources, buy them in large quantity and sell in small quantities
to consumers. This is the ‘sorting process’. In fact, the word ‘Retailing’ is actually based on this
breaking-bulk function. It is derived from the French word ‘retailer’ which means,” to cut up".
DEFINITION OF RETAILING
1 It is the last commercial link in the marketing channel and the point where products
finally reach their users.

2 Retailing includes all activities directly related to the sale of goods or services to the
ultimate customer for personal non-business use.

3 Dictionary Definition: The selling of goods to general public

CURRENT FACTS ABOUT RETAILING

1 Retail sales and employment are key economic contributors, and retail trends often mirror
trends in a nation’s overall economy.
2 The world’s 100 largest retailers generate nearly $2 trillion annually in revenues.
3 There are about 10 million retail outlets in India.
4 Almost 8% of India’s workforce is employed in the retail sector

RELEVANCE IN THE DISTRIBUTION PROCESS:

Retailing is the final stage in a channel of distribution, which comprises all of the
businesses and people involved in the physical movement and transfer of ownership of goods
and services from producer to consumer.
A TYPICAL DISTRIBUTION CHANNEL IS SHOWN BELOW:
 Another distribution function that retailers perform is to communicate with their
customers and with their manufacturers and suppliers. Customers are informed about goods and
services, special sales etc. via ads, sales personnel and store displays. Manufacturers and
wholesalers are informed about sales forecasts, customer complaints, defective products etc.
from retailers
For small manufacturers and wholesalers, retailers can provide assistance by transporting,
storing, marking, advertising, and pre-paying for merchandise. Retailers also complete
transactions with customers.

FACTS OF RETAILING
1 Even though India has well over 5 million retail outlets of all sizes and styles (or non-styles),
the country sorely lacks anything that can resemble a retailing industry in the modern sense
of the term. This presents international retailing specialists with a great opportunity.
2 It was only in the year 2000 that the global management consultancy AT Kearney put a
figure to it: Rs. 400,000 crore (1 crore = 10 million) which will increase to Rs. 800,000 crore
by the year 2005 – an annual increase of 20 per cent.
3 Retailing in India is thoroughly unorganized. There is no supply chain management
perspective. According to a survey by AT Kearney, an overwhelming proportion of the Rs.
400,000 crore retail market is UNORGANISED. In fact, only a Rs. 20,000 crore segment of
the market is organized.
4 As much as 96 per cent of the 5 million-plus outlets are smaller than 500 square feet in area.
This means that India per capita retailing space is about 2 square feet (compared to 16 square
feet in the United States). India's per capita retailing space is thus the lowest in the world.
5 Just over 8 per cent of India's population is engaged in retailing (compared to 20 per cent in
the United States). There is no data on this sector's contribution to the GDP.
6 From a size of only Rs.20, 000 crore, the ORGANISED retail industry will grow to Rs.
160,000 crore by 2005. The TOTAL retail market, however, as indicated above will grow 20
per cent annually from Rs. 400,000 crore in 2000 to Rs. 800,000 crore by 2005.
7 Given the size, and the geographical, cultural and socio-economic diversity of India, there is
no role model for Indian suppliers and retailers to adapt or expand in the Indian context.
8 The first challenge facing the organized retail industry in India is: competition from the
unorganized sector. Traditional retailing has established in India for some centuries. It is a
low cost structure, mostly owner-operated, has negligible real estate and labour costs and
little or no taxes to pay. Consumer familiarity that runs from generation to generation is one
big advantage for the traditional retailing sector.
In contrast, players in the organized sector have big expenses to meet, and yet have to keep
prices low enough to be able to compete with the traditional sector. High costs for the organized
sector arises from: higher labour costs, social security to employees, high quality real estate,
much bigger premises, comfort facilities such as air-

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