Unit I

Definition & Scope

According to Philip Kotler, Retailing includes all the
activities involved in selling of goods or services to the final
consumer for personal, non-business use.

A retailer or retail store is any business enterprise whose
sales volume comes primarily from retailing.
Overview of Retailing
Retail is the new buzzword in India.

The global Retail development Index has ranked India first,
among the top 30 emerging markets in the world.

It is believed that India has the potential to deliver the
fastest growth over the next 50 years.

While barter would be considered to be oldest form of retail
trade, since independence , retail in India has evolved to
support the unique needs of country, given its size and
complexity


Overview of Retailing
Second largest sector after Agriculture. Contributes about 12 % of the
GDP

The estimated size of the organized retail industry in India is Rs.
16,000 crores. This is 2 % of the total estimated retail trade.
Indian Retail trade increased from Rs. 2200 billion in 2000 to Rs 3300
billion by the year 2005

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").


Evolution of Retail in India
Retail in India has evolved to support the unique needs of our
country, given its size and complexity

The PDS (Public Distribution System) would easily as the single
largest retail chain existing in the country. the evolution of the
PDS of Grains in India has its origin in the rationing system
introduced by the British during world war II

The system was started in 1939 in Bombay and subsequently
extended to other cities and towns. the system was abolished
post war but however attaining independence India was forced
to reintroduce it in 1950.

There was rapid increase in the ration shops ( being increasingly
called the Fair Price Shop or FPSs)

The Canteen Stores Department and the Post Offices in India
are also among the largest network of outlets in the country
reaching population across the country.
The Khadi & Village industries (KVIC) was also set up post
independence. The cooperative movement was again
championed by the government.
India's Largest retail Chains:
1. PDS: 463,000
2. Post offices: 160,000
3. KVIC: 7,000
4. CSD Stores:3,400

Evolution of Retail in India
In the past decade, the Indian marketplace has transformed
dramatically. However from the 1950,s to the 80,s, investment
in various industries was limited due to low purchasing power
in the hands of the consumer and the governments policies
favoring the small scale sector.

The first attempts at organized retailing were noticed in the
textiles sector. One of the pioneers in this field was Raymonds
which set up stores to retail fabric.
Raymonds distribution network today comprises 20,000
retailers and over 256 exclusive showrooms in over 120 cities of
the country

Other textile manufacturing who set up their own retail chains
were Reliance- which set up Vimal showrooms and Garden Silk
Mills, which set up Garden Vareli showrooms.


Evolution of Retail in India




Traditional
Formats
Itinerant Salesman
Haats
Melas
Mandis etc.
Established
formats
Kirana shops
Convenience/
department stores
PDS/
fair price shops
Pan shops
Emerging
Formats
Exclusive retail outlets
Hypermarket
Internal retail
Malls / Specialty Malls
Multiplexes
Fast food outlets
Service galleries
The Evolution of retail in India
Global Retail Scenario
Retail store constitute 20% of US GDP and is
the 3
rd
largest employer segment in USA
Top 200 retailers alone accounts for 30% of the
world wide demand
In China 7% of the population is employed by
the retail industry
In western country the demand is saturating
because of recession, ageing population.
Companies are forced to look for emerging
countries like India and China where they still
have a huge untapped market.

Share of organized & unorganized retail with
comparison
source: Ernst &Young, The Great Indian Retail Story, 2006
85 15
81 19
55 45
40 60
36 64
30 70
20 80
3 97
1 99
0% 20% 40% 60% 80% 100%
USA
TAIWAN
MALASIA
THAILAND
BRAZIL
INDONESIA
CHINA
INDIA
PAKISTAN
ORGANISED
UNORGANISED
Functions Performed by a Retailer
Providing an assortment of products and
services
Breaking bulk
Holding inventory
Providing Services
Nature and Scope of Retailing
There is a a direct end user interaction in
retailing
It is the only point in the value chain to
provide a platform for promotions
Sales at the retail level are generally in
smaller size
Location is a critical factor in retail
business


The Benefits of Retailing
For consumers:
Break Bulk
Assortment
Hold inventory
Providing services
Providing information
Discounts

For suppliers &
wholesalers:
Last entity in the channel
to reach customer.
Acts as via media
Revenue.
Risk sharing.
For Economy:
Plays crucial role in the world economy.
Accounts significant percentage in GDP.
Employment next to agriculture especially in India.
Opportunities and Challenges
Opportunities
Management Opportunities
Job Opportunities
Investments in technical areas like software
for accounts, inventory like ERP
Employ people with expertise and interest in
finance, accounting, HRM, Logistics and
computer systems as well as marketing
Entrepreneurial opportunities
Challenges
Global recession
Ageing of consumers in most developed
economies
The empowered consumers
Technology enabled efficiency
Rise of E-age


Opportunities and Challenges
Retail Trends in India
Past Years
Existence of small kirana stores
Opening up of Indian Economy started in late 1980 and Early
1990s
Textile companies started their outlet first followed by
companies like shoppers stop, Nilgiris, Subhiksha ect.
Present Year
Indian economy is growing fast like never before. Per Capita
Income of people have increased and families have more
disposable income
Growth of metros cities like Mumbai, Chennai, Bangalore,
Delhi
More malls are constructed
Liberalization of Government policies allow foreign retailers to
have their shop in India
Present Year
More investment by Corporate in Retail Sector
Better infrastructure
Online Retailing
Existence of Hypermarkets, Discount store, Speciality
stores, Category Killers

Socio Economic and Technological
Influence
Socio Economic Influence
life expectancy has increased
Increasing middle class
Literacy rate has increased
Improved quality of life
Changing Income Profile
The age factor
The changing role of women and evolving family
structure
The changing consumption basket
Increased credit friendliness

Socio Economic and Technological
Influence
Technological Influence
Billing
CRM
Tracking orders
Understanding buying patterns
Accounting
Inventory management
Others


Government of India policy
implications on retails
Post economic reforms since 1991, some large
corporate started the modern retailing in India
Modern retailing was started by Raymond
Industries for their textile division
Once the economy was liberalized, retail
industry saw the emergence of big retailers like
Shoppers Stop and other players
Till 2006, Govt of India did not allow FDI in retail
in India. The policy prevented small kirana
stores.

Government of India policy
implications on retails
On January 24, 2006, the Union Cabinet
approved a major rationalization of the policy on
FDI
The cabinet approved upto 51% FDI in single
brand retail in India
It also allowed 100% FDI in Cash and carry
segment
Indian government still prevents FDI in multi
brand retail
Franchisee route in retail is allowed
Strategic Licensing Agreement is allowed in
retail segment.