INTRODUCTION TO

RETAIL
SMITU MALHOTRA

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WHAT IS RETAIL?

• RETAIL – DERIVED FROM THE FRENCH WORD

“RETAILLIER”, WHICH MEANS TO BREAK BULK.

• RETAILING – A SET OF BUSINESS ACTIVITIES THAT ADDS

VALUE TO THE PRODUCTS AND SERVICES SOLD TO
CONSUMERS FOR THEIR PERSONAL OR FAMILY USE.

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FUNCTIONS
• PHYSICALLY DELIVER THE PRODUCT

• PRODUCT INFORMATION

• BULK BREAKING

• ASSORTMENT

• AFTER SALES SERVICE

• INFORMATION FLOW TO THE CO.

• AND NOW
• EXPERIENCE
• CONVENIENCE

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The Marketing – Retail Equation

Manufacturer Manufacturer Manufacturer

Wholesaler

Retailer

Feedback
Retailer

Consumer Consumer Consumer

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THE RISE OF THE RETAILER-THE POWER SHIFT

• PROXIMITY TO THE CUSTOMER

• TECHNOLOGY- BARCODE
• THE RISE OF CONSUMERISM
• INTRODUCTION OF THE PRIVATE LABEL

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 A typical retail Business: functions,
merchandise flow and stakeholders

Store Manager
Buyer Zonal /
Vendors Regional
Warehouses
Retail
Stores
Vendors Company DCs
Zonal /
Regional
Warehouses
Vendors Merchandiser
Retail
Stores
The movement of merchandise across the channel
Is regarded as the supply chain.
 TOP 10 RETAILERS -- FORTUNE 500 list 2013

% change in the % change in

Revenue Profit
Fortune Rank Corporation revenue profit from
$ million $ million
from 2011 2011

Wal-Mart
1 Stores 469,162 5 16,999 8.3
40 CVS Caremark 123,133 14.3 3,877 12
59 Carrefour 105,996 -12.9 1,585 207.2
63 Tesco 104,425 0.6 197 -95.6
Costco
67 Wholesale 99,137 11.5 1,709 16.9
72 Kroger 96,751 7.1 1,497 148.6
87 Metro 85,768 -7.5 4 -99.6
106 Home Depot 74,754 6.2 4,535 16.8
113 Target 73,301 4.9 2,999 2.4
120 Walgreen 71,633 -0.8 2,127 -21.6

From the May 20, 2013 issue

Key players in the world of retail 7

Source: http://www.bandt.com.au/marketing/coles-21st-biggest-retailer-world-woolies-24th-amazon-set-destroy 24 JANUARY,
2017
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Indian Retail Sector:

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Potential untapped market
15 Mn outlets in India, 96% of which are smaller than 500 sq ft

Indian retail density of 6% is highest in the world

100% 6%
20% 20%
36% 30%
80% 40%
55%
60% 85% 81%

40%

20%

0%
US Taiwan Malaysia Thailand Brazil Indonesia Poland China India

Traditional Channel Modern Channel

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Organized retail definition

• The Parliamentary Committee Report defines organized retail as,

• -- “Organized retailing refers to trading activities undertaken by
licensed traders, that is, those who are registered for sales tax, income
tax, etc. These include corporate backed hypermarkets and retail
chains, and also the privately owned large retail businesses.
Unorganized retailing, on the other hand, refers to the traditional
formats of low-cost retailing, for example, the local kirana shops,
owner operated general stores, paan/beedi shops, convenience stores,
hand cart, pavement vendors, etc.” (Page 1-2)

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Organized retail definition

• While a regulatory framework is certainly desirable, the first two

recommendations are somewhat problematic. The first problem
with the Standing Committee Report is the definition of organized
retail. The ICRIER survey defines organized retail as follows,
• - “Organized retail or modern retail is usually chain stores, all
owned or franchised by a central entity, or a single store that is
larger than some cut-off point. The relative uniformity and
standardization of retailing is the key attribute of modern retail. The
size of each unit can be small so that a chain of convenience stores
is modern retail. A single large department store is also modern
retail.”

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RISING PROMINENCE OF ONLINE RETAIL
 Online retail business is the next generation format which has Revenues of the Indian E-commerce industry (US$ billion)
high potential for growth in the near future. After conquering
140
physical stores, retailers are now foraying into the domain of e-
retailing 120
100
 With growth in the e-commerce industry, online retail is
80
estimated to reach US$ 60 billion by 2020. 120
60
 The government plans to allow 100 per cent FDI in e-
40
commerce, under the arrangement that the products sold must be 22 30
20
manufactured in India to gain from the liberalised regime

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2015

2016
0

2020 F
 In 2016, online retail industry of the country registered a growth
of 12 per cent, over the previous year, with the revenue reaching
US$ 14.5 billion.
 The key drivers of online retail are a young population aided by Online retail in India (US$ billion)
easier access to credit and payment options, increasing internet
penetration and speed, 24-hour accessibility and convenient and 70
secured transactions 60
 Online retailers continue promotional prices in the market, 50
offering a significant boost to e-retailing in consumer durable 40
60
sector 30
 Options like cash-on-delivery and manufacturers’ warranty add 20
13 15
fuel to this rage. Cash-on-delivery is the most preferred payment 10
option with over 30 per cent of buyers opting for it in India

2015

2016

2020 E
0
 The computer peripherals, cameras, mobiles and lifestyle
segments account for a majority of total purchases

Source: MasterCard Worldwide Insights 4Q 2010, PWC e commerce in India report, ASSOCHAM, UN Report 'The power of 1.8 billion'
Retailing-Two Career Paths

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CLASSIFICATION

Food Type of
Retailers Retailing Ownership

General
Merchandize Non-Store
Retailers Retailers
 FOOD RETAILERS –
CLASSIFICATION
Supercentres

Supermarkets A C Hypermarkets

FOOD
RETAILERS

Convenience E D Warehouse
Stores Clubs
FOOD RETAILERS

SUPERMARKETS
• Self Service Food Store
• 70-80% of sales comes from Food Products
• 20000-30000 sq ft Size
• Limited assortment Supermarkets: Stock lesser
number of SKU’s than conventional supermarket;
Limited variety and assortment of brands
• Example: Food Bazaar
FOOD RETAILERS

SUPERCENTRES
• Combines a supermarket and a full line discount store
• Broad Assortment
• One stop shopping experience
• Usually outside the city, customers have to travel
distances
• 150000-220000 sq ft in size
FOOD RETAILERS

HYPERMARKETS
• Combination of Food (60-70%) and General
Merchandize stores (30-40%)
• Carry larger proportion of food items than supercentres
with high emphasis on Perishables
• Stock fewer SKU’s than supercentres
• 100000-300000 sq ft in size
• Example: Big Bazaar
FOOD RETAILERS

WAREHOUSE CLUBS
• Offers a limited and irregular assortment of food and
general merchandize
• Low Prices for the small Businesses
• Equivalent to Wholesalers in India
• 100000-150000 sq ft in Size
FOOD RETAILERS

CONVINIENCE STORES
• Convenient Location near residential areas
• Limited variety and assortment
• Easy access, storefront parking, quick in and out access
are key benefits
• Open for long hours, seven days a week
• Modern version of conventional mom and pop stores
• Example: In & Out
 GENERAL MERCHANDIZE RETAILERS

DEPARTMENT STORES
• Broad Variety and Deep Assortment
• Offer Customer Services
• Not very convenient as usually located inside large malls
and not the local neighborhood
• Example: Shoppers Stop

FULL LINE DISCOUNT STORES

• Broad Variety of Merchandize
• Limited Service
• Low Prices
• Offer private labels and National Brands
• Example: Target
 GENERAL MERCHANDIZE RETAILERS

SPECIALITY STORES
• Offer a limited number of complimentary merchandize
categories
• Focus towards very specific market segment
• Offer deep but narrow assortment
• Example: Archies Gallery, Planet M

DRUGSTORES
• Concentrate on Health and Personal Grooming
merchandize
• Pharmaceuticals represent over 50% of sales
• Highly fragmented market in India
• Example: 98.4, Apollo Pharmacies
 GENERAL MERCHANDIZE RETAILERS

CATEGORY SPECIALISTS
• Discount Stores with narrow but deep assortment of
merchandize
• Also known as “category killers” for offering very low
prices in the category they operate in

EXTREME VALUE RETAILERS

• Small full line discount stores
• Offer limited merchandize assortment at very low prices
• Example: The Dollar Store,
 GENERAL MERCHANDIZE RETAILERS

FACTORY OUTLETS
• Sell Branded Merchandize at discounted price
• Located away from conventional shopping places
NON STORE RETAILERS
CHANNEL MODE OF FEATURES
COMMUNICATION
Electronic Dramatically changed the
Internet
traditional retailing
General and specialty catalog
Catalog Catalog
retailers
Successful with rural customers who
Direct Mail
Letters and Brochures lacked access to retail stores.
Compete with CRM
Direct selling Party plan system , Multi level
Salespeople
network
Television Home Customers watch TVB program Cables channels
Shopping and then place orders for the Infomercials
merchandise by telephone Direct response advertising
Automated Services are stores in machine and Vending machine placed at
Machine Retailing dispensed to customers when they convenient ,high traffic locations
deposit cash/credit card primarily contain snacks or drinks
Retail Mix

Customer Location
Service

Store Design Merchandise

And Display Retail Strategy Assortment

Communication Pricing
Mix

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 Retailing Decisions
Retailer Resources and
Opportunity
Competencies
Identification and Sizing

Drivers of Growth
•Shoppers Markets to Enter
•Suppliers

Shopper Expectations Shopper Profile Competition

Value Proposition/
Positioning

Merchandise Supply Location Layout Pricing Promotion HRM/OD

Format
Chain

•Category •Suppliers •Physical •Trading Area •Customer Flow •Competition •Increase bill size •Serviced/Self
•Items •Logistics Stores •Store Choice •Ease of •Traffic Building •Increase bill •Motivation
•Brands •Turnarounds •Online •Traffic Purchase •Margin value •Recruitment
•Prime Protector •In-store/Out and Development
Categories Store

Profitability
 The Pentagon & Triangle of
Retail- Building Competitive Advantage
 The Eight Ways To Win In Retailing
The Pentagon & The Triangle
Size
Place Location
Layout & Design
Positional Style & Fashion
Communication Systems Product Intensity
Promotional Assortment

Logistics Suppliers

Service Price
Knowledge People Value
Climate Quality

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